OIL FUTURES: US crude, gasoline prices settle lower amid signs of weaker demand

Crude and refined product futures settled lower July 20 on the heels of a US Energy Information Administration report pointing to slowing US energy demand.

NYMEX August RBOB retreated 3.21 cents to settle at $3.2754/gal, and August ULSD dipped 2.25 cents to $3.6043/gal.

Counter-seasonal US gasoline stocks builds extended for a second week in the week ended July 15, EIA said July 20, with nationwide inventories climbing 3.5 million barrels to 228.44 million barrels.

Back-to-back weekly gasoline builds have seen stocks surge 9.3 million barrels to a twelve-week high.

The builds come as implied demand remains well below normal. Total product supplied for gasoline was 9% behind the five-year average in the week to July 15, EIA said, despite climbing 460,000 b/d from the week prior to 8.52 million b/d.

The ICE New York Harbor RBOB crack versus Brent eased to $24.65/b in afternoon trading, on pace for the lowest close since late-March.

NYMEX August WTI settled $1.96 lower at $102.26/b, and ICE September Brent declined 43 cents to $106.92/b.

Total US commercial crude stocks fell 440,000 barrels in the week to July 15 to 426.61 million barrels, EIA said, leaving stocks 8.2% behind the five-year average for this time of year.

The draw ran counter to market expectations of a more than 1-million-barrel build, however, it comes despite a slowdown in refinery demand.

Total refinery net crude inputs dropped 320,000 b/d to 16.32 million b/d, a four-week low, while total refinery utilization fell 1.2 percentage points to a five-week low of 93.7% of capacity.

The slowdown in refinery demand likely contributed to a 1.14-million-barrel inventory build at the NYMEX delivery point of Cushing, Oklahoma. Cushing stocks have now climbed for three straight weeks and are at the highest since the week ended June 3.

Still, perceptions of a tight oil market remained intact, with analysts unwilling to rule out higher prices in the near future.

"Fundamentally, the market remains undersupplied, with OPEC suggesting the shortfall next year could be up to a million barrels a day, which is relatively unprecedented and signals higher prices ahead," SPI Asset Management managing partner Stephen Innes said in a note July 20.

Crude has fluctuated extensively through the week, caught between concerns stemming from uncertain Russian energy supplies and a weaker demand outlook given looming recession fears.

"Fundamentally, there was very little in the way of fresh drivers for the crude market. The September/October spread has traded to a backwardation of almost $4.50/b, highlighting the tightness that still persists in the oil market," ING head of commodities strategy Warren Patterson said in a note July 20.

Brent futures remained relatively well supported due to continued concerns of a looming European energy crunch.

The European Commission announced proposals July 20 to reduce natural gas use in Europe by 15% until next spring to counter the threat of a drastic reduction in Russian gas supplies this winter.

The 15% target was equivalent to 45 Bcm of gas, European Commission President Ursula von der Leyen said -- a figure that was based on average consumption over the last five years for the period August to the end of March.