Oil prices dip on US gasoline build, but supported by weak dollar
SEOUL – Oil prices slipped on Thursday after US government data showed that gasoline stocks and distillate inventories rose last week, although the falls were checked by continuing Middle East geopolitical tensions and a weaker U.S. dollar.
U.S. July crude lost 32 cents to $59.60 a barrel as of 0338 GMT after falling 5 cents in the previous session.
Brent August crude declined 18 cents at $63.69 a barrel after it settled 17 cents higher on Wednesday at $63.87.
Data from the U.S. Energy Information Administration (EIA) showed crude inventories fell more than expected last week, but gasoline stocks rose by 460,000 barrels, more than analysts’ expectations for a 314,000-barrel drop, according to a Reuters poll.
The EIA report also showed that operating capacity at U.S. refineries fell to 93.1 percent last week from 94.6 percent.
“Expectations were for an increase … the reaction to this (inventory) data shows that the reasoning behind such price support is fragile,” ANZ bank said in a report.
After the Federal Reserve signalled it may wait until late this year to raise interest rates, the U.S. dollar slid while Wall Street stocks rose in volatile trading. Asian equities also rose early on Thursday.
“Oil prices were revived by a weakening USD as a result of a bearish FOMC,” Phillip Futures said. “Since we expect the FOMC meeting to be the main card this week, we believe that prices should move sideways for the rest of the week.”
Prices were also supported by the continuing conflicts in the Middle East.
Islamic State killed five policemen in a town near Iraq’s biggest refinery, in an attack that may help ease pressure on some of its fighters trapped in the strategically important facility, a security official said.
Chinese economic data, meanwhile, showed the country’s average new home prices in 70 major cities fell for a ninth consecutive month in May from a year earlier, raising further concerns that troubles there may eventually work their way into oil demand growth.
In the United States, Tropical Depression Bill drenched large parts of Texas on Wednesday, but oilfields in the Gulf of Mexico and near the coast were unaffected. Refineries also ran normally. – Reuters