NEW YORK – Oil prices were mixed in volatile trading on Wednesday after a huge drawdown in U.S. crude stockpiles was countered by a larger-than-expected build in gasoline and distillates, which include diesel.
Crude inventories fell 5.5 million barrels in the week to Aug. 21, the biggest one-week decline since early June, according to government data that countered analysts’ expectations for an increase of 1 million barrels.
But gasoline stocks rose 1.7 million barrels, compared with forecasts for a 1.3 million-barrel drop. Distillates climbed 1.4 million barrels, versus expectations for a 1.0 million barrels increase.
Despite the drop in crude stocks, which was in line with a report late on Tuesday from industry group the American Petroleum Institute, U.S. oil prices whipped lower on the data.
“The products builds are overwhelming the constructive crude draw,” said Scott Shelton, commodities specialist at ICAP in Durham, North Carolina.
U.S. crude’s front-month contract was down 25 cents at $39.06 a barrel by 12:03 p.m. EDT.
The front-month in Brent, the global oil benchmark, was up 7 cents at $43.28.
Gasoline tumbled for a third straight day to 8-month lows, down 5 percent for the session and 12 percent for the week. Gasoline’s crack, or premium that refiners make from turning a barrel of crude into the fuel, fell to its lowest in six months.
Oil has lost a third of its value since June on high U.S. production, record crude pumping in the Middle East and concern about falling demand in Asian economies.
On Monday, both crude oil benchmarks saw their lowest trades since early 2009, dropping as much as 6 percent in one session after heavy falls in equity markets.
Some analysts also said the latest decline in crude stocks may have been an aberration driven by a brief dip in imports. Most are bracing for a sustained rise in stocks in coming months as U.S. refiners shut for seasonal work.
“We had a draw, but the market needs to see weeks of that to be convinced,” said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut.
Tariq Zahir, an oil bear at Tyche Capital Advisors in Laurel Hollow, New York, concurred.
“We feel today’s numbers are not the start of a new trend. In a few weeks from now, we will look back at this draw as a one off,” Zahir said, citing the end of the U.S. summer driving season and record pumping of OPEC crude.
(Additional reporting by Lisa Barrington in London, Meeyoung Cho in Seoul and Henning Gloystein in Singapore; Editing by Christopher Johnson, David Evans and Andrew Hay)
This article was written by Barani Krishnan from Reuters and was legally licensed through the NewsCred publisher network.