By Alex Kennedy / AP
Singapore: Oil prices were steady Thursday in Asia near $119 a barrel as concerns over slackening US fuel demand offset the shutdown of a major Turkish pipeline after a fire.
“The oil market right now is overwhelmingly preoccupied with poor US oil demand,” said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore. “The market is choosing to ignore somewhat some of the supply-side issues, such as the pipeline fire,” he added.
Light, sweet crude for September delivery rose 18 cents to $118.76 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract dropped 59 cents overnight to settle at $118.58 a barrel.
The US Energy Department’s Energy Information Administration said Wednesday that crude supplies rose 1.7 million barrels in the week ended 1 August, slightly more than the 1.2 million-barrel increase expected by analysts surveyed by energy research firm Platts.
The EIA said inventories of distillate fuel, which include diesel and heating oil, jumped 2.8 million barrels. The analysts had expected an increase of 2.3 million barrels.
Meanwhile, EIA data showed gasoline stockpiles fell 4.4 million barrels last week, much more than the 1.4 million drop expected by analysts.
The big drop in gasoline stocks surprised some oil market traders, but analysts said it likely signals that gas distributors have taken more deliveries from the refiners as the summer driving season enters its last month.
“I think we need to drop another 30 or 40 cents a gallon (3.8 liters) before we really see any change in driving habits,” said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Illinois.
Lending support to that idea, the EIA said demand for gasoline for the month ended 1 August topped out at about 9.4 million barrels a day, 2.3% lower than for the same period last year.
“The inventory data again confirmed that product demand has been slow and backed up this bearish view of the US market,” Shum said.
In London, September Brent crude was up 30 cents at $117.30 a barrel on the ICE Futures exchange.
A fire Wednesday on a Turkish section of the Baku-Tbilisi-Ceyhan pipeline — a major supplier of crude to Western markets — disrupted the flow of oil and helped support prices.
In other Nymex trading, heating oil futures fell 0.15 cent to $3.2364 a gallon (3.8 liters) while gasoline prices gained 0.82 cent to $2.9575 a gallon. Natural gas futures rose 6.5 cents to $8.838 per 1,000 cubic feet.