Oil prices hit multi-month lows on Wednesday after a surge in US gasoline stockpiles as the summer season, the country's biggest demand period for motor fuels, neared its end. Futures of Brent, the global oil benchmark, hit a six-month bottom while US crude touched a 4-1/2-month trough, ignoring a bigger-than-expected drawdown in US crude stockpiles announced by the Energy Information Administration.
Traders and investors focused instead on the unexpectedly large build in gasoline inventories.
"The resulting lower refining margins will decrease the incentive for crude oil processing, leading eventually to a renewed rise in crude oil stocks from an already lofty level," Carsten Fritsch, senior commodity analyst at Frankfurt-based Commerzbank AG, told the Reuters Global Oil Forum.
US crude futures were down 65 cents, or 1.4 percent, at $45.09 a barrel by 1:50 pm (1750 GMT), hitting a low last seen in March of $44.83. The market initially rallied nearly $1, reacting to the drawdown in crude stockpiles before retreating on the higher refinery and gasoline stock numbers. Futures of Brent fell 60 cents to $49.39 a barrel, after earlier falling as low as $49.02.
Gasoline futures fell 1.4 percent, hitting a 7-1/2-month low.
A pre-summer rally in gasoline and diesel was one of the main drivers for higher crude prices in the second quarter. Margins for gasoline are down $9 a barrel from July highs, while those for ultra-low-sulfur diesel have fallen about $5 from last month's peak.
The EIA said US crude inventories fell by 4.4 million barrels last week, three times more than the 1.5 million barrels forecast by analysts in a Reuters poll. Gasoline stocks rose by 811,000 barrels, versus expectations for a 500,000-barrel drop. Distillate inventories also grew, but the rise of 709,000 barrels was less than half of forecast levels.
US crude futures fell 21 percent in July and Brent lost 18 percent as the global oil oversupply grew from record pumping by the biggest Middle East producers and slowing Chinese demand. A rise over the last fortnight in the number of rigs actively drilling for oil in the United States added to concerns.
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