Investing.com - Crude prices fell on Wednesday after weekly data showed a build in U.S. stockpiles as the summer driving season came to a close, tripping up market bulls who had bet on an inventory drop and an uninterrupted price rally on fears over sanctions placed on Iranian oil.
Brent crude, the U.K.-traded global benchmark for oil on the Intercontinental Exchange, saw its December contract drop by 0.6%, or $0.47, to $80.79 a barrel . On Tuesday, Brent hit its highest level since November 2014, reaching $82.55.
Crude oil WTI futures for November slid 0.9 %, or $0.66, to $71.62.
The U.S. Energy Information Administration (EIA) said in its weekly report that domestic crude oil inventories rose by 1.852 million barrels during the week ended Sept. 21. Market analysts had expected a decline of 1.279 million barrels instead. The American Petroleum Institute, which collects data independently from the industry, reported on Tuesday an increase of 2.903 million barrels for the week in review.
Closer examination of the EIA data showed the build in crude stocks came amid a huge drop of 901,000 barrels per day (bpd) in refining demand as the end of summer signaled less need for gasoline and time for refineries to get maintenance done. Gasoline stocks jumped by 1.5 million barrels, vs. forecasts for a rise of 788,000 barrels.
“A meteoric drop in refining activity … as refinery maintenance season gets into full swing,” said Matthew Smith, director of commodity research at Clipper Data, a New York-headquartered tracker of oil cargoes.
Smith said the inventory build came despite oil imports into the U.S. falling during the week in review and U.S. crude exports rising to 2.6 million bpd. International demand for U.S. crude has been on the rise due to WTI’s widening discount to Brent, now at around $10 per barrel.
The EIA said that supplies at Cushing, Oklahoma, the key delivery point for delivery of WTI, increased by 461,000 barrels last week.
While gasoline stockpiles rose, inventories of distillates, which included diesel, unexpectedly fell by 2.24 million barrels vs. forecasts for a rise of 752,000 barrels. That indicated that trucking and other commercial transportation activity remained strong despite a drop in leisure road travel.
Gasoline futures fell by 0.2% to $2.0450 a gallon while heating oil futures, which represents distillates, slid 0.2% to $2.3047 a gallon.
Oil prices had rallied broadly to near four-year highs in the past two weeks, reacting to U.S. sanctions against Iranian oil exports due on Nov. 4.
The Organization of the Petroleum Exporting Countries (OPEC) added fuel to the run-up earlier this week when it refused President Donald Trump’s request to raise production to make up for barrels that would be lost from the Iranian sanctions.
Khalid al-Falih, Saudi Arabia’s energy minister and one of OPEC’s top decision makers, also rebuffed Trump’s call for OPEC to put a lid on the oil rally, saying: “I do not influence prices.”
The president has since accused OPEC of “ripping off the world".