US crude slips on inventory build, gasoline rallies

NEW YORK — US oil prices slipped on Wednesday after a surprising increase in US crude inventories, while US gasoline futures rallied one percent on a sharp falloff in inventories.

Brent crude edged up after top exporter Saudi Arabia reiterated its determination to end a threeyear supply glut.

The deep draw in gasoline inventories came even as refining output rose, according to data from the US Energy Information Administration (EIA).

This suggested demand remained strong after the peak US driving season.

Crude inventories rose by 856,000 barrels in the week to Oct. 20, the EIA said. Analysts had expected a decrease of 2.60 million barrels. Production rebounded from a falloff due to hurricane Nate, and imports rose.

Brent crude futures settled up 11 cents at $58.44 a barrel. US West Texas Intermediate crude dropped 29 cents to $52.18.

The EIA data showed gasoline and distillate inventories both fell by more than five million barrels, and refinery utilization rates rose by 3.30 percentage points.

RBOB futures rose 1.10% to $1.7341 a gallon. Heating oil futures got a brief boost but settled slightly lower.

“Demand has been a little stronger than some people might have anticipated as we pushed out of the driving season, and that’s where today’s strength is coming from,” said Gene McGillian, manager of research at Tradition Energy in Stamford, Connecticut.

On Tuesday, Saudi Arabian Energy Minister Khalid al-Falih on Tuesday raised the prospect of prolonged output restraint even after the end of the Organization of the Petroleum Exporting Countries (OPEC)-led pact to cut supplies.

Even as global inventory levels are falling, Brent has remained below $60 a barrel, partly on concern the crude glut may grow again after March 2018, when the output reduction deal is due to end.

OPEC, Russia and other producers have cut oil output by about 1.80 million barrels per day ( bpd). OPEC’s next meeting is on Nov. 7 in Vienna, Austria, when they will consider extending the deal.

While other producers cut output, US production rebounded to 9.50 million bpd in the latest week. US crude exports have averaged 1.70 million barrels a day over the past four weeks, the highest ever.

“Saudi Arabia’s determination to rebalance the market, together with ongoing geopolitical tensions in the Middle East, will remain supportive of oil prices,” said Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics in London.

“However, rising oil production in the US and persistently high exports from the country will be the key bearish factors.” —