Crude price slide extends for fifth day after surprise US gasoline build

Oil futures finished a fifth straight session lower Aug. 18 as an unexpected US gasoline build underscored concerns the delta variant spread could limit near-term energy demand growth.

NYMEX September WTI settled down $1.13 at $65.46/b, and ICE October Brent declined 80 cents to $68.23/b.

Oil prices came under pressure after US Energy Information Administration data released midmorning showed US gasoline inventories climbed 700,000 barrels in the week ended Aug. 13 to 228.17 million barrels.

"Crude prices extended losses after gasoline stockpiles unexpectedly rose, marking the end of peak summer driving season," OANDA senior market analyst Ed Moya said. "There are still too many question marks over the crude demand outlook over the next few months and that will weigh on crude prices. The return to the office no longer seems like a certainty, and delays in approving vaccines for younger children will likely mean inconsistent demand as the school year starts."

NYMEX September RBOB settled 1.79 cents lower at $2.1477/gal, and September ULSD gave up 1.49 cents to settle at $2.0212/gal.

The gasoline build ran counter to market expectations and narrowed the deficit to the five-year average to less than 3% from nearly 4% the week prior.

American Petroleum Institute data released late Aug. 17 showed US gasoline stocks down 1.2 million barrels in the week to Aug. 13, while analysts surveyed by S&P Global Platts on Aug. 16 had called for a 2.3 million-barrel decline over the period.

The build weighed on NYMEX RBOB futures despite a significant draw on the US Atlantic Coast, home to the NYMEX delivery point of New York Harbor. USAC inventories fell 2.91 million barrels to 58.7 million barrels, a nearly two-year low and 10.7% behind the five-year average.

The ICE New York Harbor RBOB crack versus Brent fell to around $16.56/b in afternoon trading, on pace for the lowest close since June 16.

Total US commercial crude stocks fell 3.23 million barrels to 435.54 million barrels, EIA said, leaving stocks around 6% behind the five-year average, putting the deficit at an eight-week low but still roughly in line with recent weeks.

"The modest oil inventory draw still leaves crude vulnerable to an additional correction as traders express concerns surrounding the delta variant's negative impact on demand," TD Securities analysts said in a note. "Markets are looking at the risk that the previously expected deficit in Q3 morphs into a balanced or even a surplus market."

Oil prices saw additional headwinds from a stronger US dollar. The ICE US Dollar Index climbed to 93.135 in afternoon trading, on pace for the highest close since March 31.