West Texas Intermediate crude declined with losses in gasoline as U.S. inventories of the fuel expanded for a third week, threatening to depress refining margins. Brent also fell.
Gasoline stockpiles grew by 3.38 million barrels last week and supplies around New York Harbor, where futures contracts are delivered, were at the highest seasonal level since 2008, Energy Information Administration data show.
WTI briefly pared losses after the number of Americans filing for unemployment benefits dropped to an eight-year low, then fell further.
“The increase in gasoline and distillate inventories and the fall in demand is weighing on the entire complex,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy.
WTI for September delivery slipped 47 cents, or 0.5 percent, to $102.65 a barrel at 10:35 a.m. on the New York Mercantile Exchange. The volume of all futures traded was 20 percent below the 100-day average for the time of day.
Brent for September settlement was 64 cents, or 0.6 percent, lower at $107.39 a barrel on the London-based ICE Futures Europe exchange.
The European benchmark crude traded at a premium of $4.74 a barrel to WTI on ICE, compared with $4.91 Wednesday.
Gasoline supplies increased to 217.9 million barrels in the week ended July 18, the most since March 14, according to the EIA, the Energy Department’s statistical arm.
In the Central Atlantic region, supplies were little changed at 30.3 million. Implied demand for gasoline fell 265,000 barrels a day to 8.79 million, the weakest since June 6.
“Demand must be waning a bit and that’s why we are seeing prices come down,” said Phil Streible, a Chicago-based commodities broker at RJO Futures.
Distillate inventories, including heating oil and diesel, rose by 1.64 million barrels last week, the EIA report showed.
Gasoline futures dropped 2.41 cents to $2.836 a gallon on the Nymex after ending at $2.8601 yesterday, the lowest settlement since February.
“Weak demand is depressing the prices,” said Rich Ilczyszyn, chief market strategist and founder of Iitrader.com in Chicago.
U.S. refineries operated at 93.8 percent of their capacity last week.
The crack spread, the profit to process three barrels of oil into two of gasoline and one of heating oil, slipped as low as $16.37 a barrel based on September futures. The front- month 3-2-1 spread was $21.21 on July 14.