Oil futures lost ground Thursday, pulling back from five-month highs and threatening to end a four-day winning streak as analysts assessed signs of lackluster fuel demand.
West Texas Intermediate crude for September delivery
was down 35 cents, or 0.8%, at $41.84 a barrel on the New York Mercantile Exchange. October Brent crude
the global benchmark, was off 5 cents, or 0.1%, at $45.12 a barrel on ICE Futures Europe.
WTI and Brent on Wednesday broke out of a longstanding trading range. Both posted their highest settlements since March 6, but ended off session highs after the Energy Information Administration said U.S. crude stocks fell by a much larger-than-expected 7.4 million barrels in the week ended July 31, although gasoline inventories unexpectedly rose 419,000 barrels. Distillate supplies increased by a much larger-than-expected 1.6 million barrels.
Oil’s gains appear to have been driven by growing hopes Congress and the White House will agree on another round of coronavirus fiscal stimulus, the fall in crude inventories, and the slide in the U.S. dollar, which has traded at more than two-year lows based on the ICE U.S. Dollar Index
said Warren Patterson, head of commodities strategy at ING, in a note.
But the message sent by the rise in product inventories could dampen prospects for further gains, he said, noting that distillate stocks are slightly below 180 million barrels, which more than 42 million barrels above levels seen this time last year. Meanwhile, implied demand for total products fell by 1.18 million barrels over the week.
“It is difficult to get overly constructive towards the oil market with demand having stalled and this product overhang,” Patterson said.
were on the rise after taking a breather Wednesday. The September contract rose 1.5% to $2.224 per million British thermal units and was on track for a weekly rise of more than 23%, with gains tied in part to forecasts for hotter than previously expected weather and signs of increased demand for liquefied natural gas.
The EIA’s weekly report on natural-gas storage Thursday morning is expected to show a 27-billion cubic feet (Bcf) injection for the week ended July 31, according to a survey of analysts by S&P Global Platts.