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Crude Oil Futures Fall on Large US Products

Crude Oil futures fell in Asia’s mid-morning trade on June 10 due to a huge gain in US product stockpiles, casting doubt on the region’s confidence about summer driving demand. The ICE August Brent futures contract fell by 65 cents/b (0.90 percent) at $71.57/b at 10:38 a.m. Singapore time (0238 GMT), while the NYMEX July light sweet crude contract was down 61 cents/b (0.87 percent) at $69.35/b.

Due to increased refinery run rates, the Energy Information Administration recorded a 5.2 million-barrel fell in US Crude Oil stockpiles at the end of the week of June 4. However, a considerable gain of 7 million barrels in gasoline stocks and a 4.4 million barrel rise in distillate stockpiles over the same period weighed on market sentiment. According to EIA data, US gasoline inventories grew by 1.5 million barrels in the week ending May 28, while distillate inventories grew by 3.7 million barrels.

Crude Oil Futures Fall on Large US ProductsThe senior market analyst at OANDA, Edward Moya, said, “Refiners are pumping out a lot of fuel, operating at 91.3% of their operable capacity. The pickup in crude demand has been solid over the past month, but this week showed a little dip. The headline draw of 5.2 million barrels, greater than the expected decline of 2.9 million barrels, but everyone seemed to focus on the surprising massive builds with gasoline and distillate inventories.”

The increase in gasoline stockpiles represented the failure of bullish market expectations following Memorial Day weekend, which traditionally marks the summer driving season. The EIA report showed that weekly gasoline supply, a proxy for demand, fell to its lowest level since February, adding to the bearish demand signals.

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