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UPDATE 8-Oil hits multi-month lows on U.S. gasoline build worries

Published 06/08/2015, 05:03 am
© Reuters.  UPDATE 8-Oil hits multi-month lows on U.S. gasoline build worries
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* Brent hits 6-month low, U.S. crude 4-1/2 month bottom

* EIA announces 4.4 mln barrel U.S. crude draw, more than expected

* Gasoline build exceeds expectations too, negating crude draw (Updates with settlement prices, paragraphs 5-7)

By Barani Krishnan

NEW YORK, Aug 5 (Reuters) - Oil prices hit multi-month lows on Wednesday after a surge in gasoline stockpiles in the United States 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 that of U.S. crude touched a 4-1/2-month trough, despite a bigger-than-expected drawdown in U.S. crude stockpiles announced by the Energy Information Administration.

Traders and investors focused instead on the unexpectedly large build in gasoline inventories and its impact on refining margins.

"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 (XETRA:CBKG), told the Reuters Global Oil Forum.

U.S. crude futures CLc1 settled down 59 cents, or 1.3 percent, at $45.15 a barrel, 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 gasoline numbers.

Futures of Brent LCOc1 closed 40 cents lower at $49.59 a barrel, after falling to a January low of $49.02.

Gasoline futures RBc1 settled down almost 1 percent, hitting a 5-1/2 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 CL-RB1=R are down $9 a barrel from July highs, while those for ultra-low-sulfur diesel HOc1 have fallen about $5 from last month's peak.

The EIA said U.S. crude inventories USOILC=ECI 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 USOILG=ECI rose by 811,000 barrels, versus expectations for a 500,000-barrel drop. Inventories of distillates, which include diesel, grew as well, although the rise of 709,000 barrels was less than half of forecast levels. EIA/S

U.S. 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.

"The overarching theme in the oil market ... is the status of U.S. oil supply and whether or not we'll be facing an imminent decline and the latest weekly data hasn't brought any comfort relative to those kind of expectations," said Harry Tchilinguirian, oil analyst for BNP Paribas (PARIS:BNPP) in London.

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