Oil steady above $69 after fall on gasoline build
Oil prices were little changed just above $69 a barrel on Thursday, after falling in the previous session on data showing a larger-than-expected increase in U.S. gasoline stocks, which dented hopes of a demand recovery.
The next major clue on the economy of the world’s top energy consumer will come from the widely watched U.S. non-farm payroll report for June out later Thursday, which is expected to show unemployment at a 26-year high of 9.6 percent.
U.S. crude for August delivery edged down 12 cents to $69.19 a barrel by 0340 GMT (11:40 p.m. EDT). The contract settled 58 cents lower at $69.31 on Wednesday.
London Brent crude fell 6 cents to $68.73.
“The overall economic sentiments are very weak so oil prices could see more selling pressure. Furthermore, prices have also jumped more than 40 percent in the last quarter, so investors would be happy to lock in profits,” said Benson Wang, a trader at Commodity Broking Services in Sydney.
Gasoline stockpiles in the world’s top consumer rose by 2.3 million barrels last week, above analysts’ forecasts, data from the U.S. Energy Information Administration showed.
Distillate inventories, including diesel, increased by 2.9 million barrels, while crude stockpiles fell by 3.7 million barrels.
The swell in gasoline stocks, which comes ahead of the July 4 Independence Day holiday — traditionally the peak of the summer driving season — reflects a continued weakness in fuel demand and suggests that a recovery in energy consumption in the world’s largest economy was at a much slower pace than some analysts had expected.
Rising retail fuel prices in China and India, where both governments this week unexpectedly raised gasoline and diesel prices by as much as 10 percent, could also become a potential deterrent to demand growth.
The economic crisis has battered fuel demand worldwide, sending crude off record highs above $147 a barrel hit last July. But a weak U.S. dollar and optimism that a potential economic recovery could push demand higher has helped crude to jump 42 percent in the last quarter — the strongest quarterly gain since 1990.
But recent data in the United States, including weak consumer spending and gloomy unemployment numbers, as well as evidence from Europe and Asia suggest a global economic recovery will be choppy this year, if it occurs at all.
On the supply side, rising output from OPEC is also putting downward pressure on crude prices, with a Reuters survey showing OPEC output rose in June, with members’ compliance with agreed cuts at 72 percent last month, a fall from 75 percent in May.
Qatar has notified at least two Asian term buyers that it will supply its Marine crude at full contracted volumes for August, compared with a 14 percent supply curbs for July, sources at the firms said on Thursday.