Thursday saw a dip in crude oil prices, after the inventory report reflected an increase in U.S. gasoline and distillate inventories due to higher refinery production. However, crude inventories fell more than expected, limiting the price drop.
Standing at five-month lows, light, sweet crude for October delivery fell to US$67.27 a barrel in late morning trading on the New York Mercantile Exchange. The contract had fallen more than $1 on Wednesday to settle at $67.50 a barrel - the lowest closing price for front-month futures since April 7.
Gasoline inventories rose by 700,000 barrels to 206.9 million barrels, 6.6% above year-ago levels. Distillate fuel inventories rose by 3.1 million barrels to 139.9 million barrels. Refinery operation rose to 93.6 percent of capacity, up from 92.9 percent the week prior, boosting gasoline and distillate production.
Conventionally, U.S. petroleum demand tends to fall after Labor Day, which marks the end of the summer school holidays. U.S. demand for motor gasoline, distillate fuel and jet fuel, as against last year's is strong.
Analysts expect OPEC, in its meeting next week, to maintain its official output target of 28 million bpd. If OPEC announces cuts in an attempt to prop up prices, the strategy could backfire because it would signal to a market that has worried for several years about tight supplies that the world finally has oil to spare.
08-Sep-06 
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