Published: Thu, December 07, 2017
Economy | By Melissa Porter

Oil prices drop as gasoline futures sink to a 7-week low

That would be the biggest gain since January 2016 if replicated in government data due later on Wednesday. The magnitude of the build overshadowed expectations about shrinking US supplies of stored crude.

Oil prices fell on Wednesday after a surprise rise in USA inventories of refined products in what the market interpreted as a sign of flagging demand. Still, "I don't think gasoline demand is going to fall apart all of a sudden".

"In the supply and demand picture for oil, there hasn't been much change". The cartel's output dropped last month to the lowest in half a year. Bank of America Merrill Lynch estimated the global benchmark, Brent crude, will rise to $70 a barrel by the middle of 2018.

U.S. West Texas Intermediate (WTI) crude futures were at $57.50 a barrel, down 22 cents. Total volume traded was about 31 percent below the 100-day average.

Brent crude futures were down $1.28 at $61.55 US a barrel approaching noon ET Wednesday, after reaching a session high of $62.93 USA, while US crude futures dropped $1.33, or 2.2%, to $56.33 U.S. It marks the lowest close for the benchmark since November 16 and the biggest one-day decline for WTI since October 6.

Goldman increased its 2018 Brent estimate to $62 a barrel, from $58, and its WTI forecast to $57.50, from $55.

But the report showed that product inventories increased, with gasoline up 6.8 million barrels to 220.9 million, 3.8 percent below last year's level, and distillates up 1.7 million barrels to 129.4 million, a year-on-year decline of 17.4 percent.

The perception that the higher fuel stocks pointed to weak demand outweighed a drop in crude inventories by 5.5 million barrels to 451.8 million barrels, traders said.

Information released Wednesday by the Energy Information Administration showed US crude oil inventories decreased by 5.6 million barrels last week.

The American Petroleum Institute (API) reported on Tuesday that United States crude stocks fell by 5.481 million barrels, more than the 4.1 million decline seen.

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