Oil prices fell Wednesday after the nation’s oil and gasoline supplies rose last week with the release of millions of barrels from the Strategic Petroleum Reserve.
Benchmark West Texas Intermediate crude for September delivery lost $1.49 at $98.10 per barrel in midday trading on the New York Mercantile Exchange. In London, Brent crude rose 8 cents to $118.36 per barrel on the ICE Futures exchange.
Commercial crude supplies increased as the U.S. released about 2.3 million barrels from the Strategic Petroleum Reserve. It’s part of the 60-million barrel release announced by the International Energy Agency last month to help cover potential shortfalls in global markets resulting from the absence of Libyan oil. The U.S. will eventually release 30 million barrels from the strategic reserve as part of that.
Libya’s daily output of 1.2 million barrels has been shut down for months because of unrest in that country.
At the gas pump the national average for gasoline rose about half a cent Wednesday to $3.698 a gallon, according to AAA, Wright Express and the Oil Price Information Service. That’s 1.4 cents more than a week ago and 95.6 cents more than a year ago.
The Energy Department’s Energy Information Administration said the nation’s commercial oil supplies grew by 2.3 million barrels to 354 million barrels last week. Gasoline supplies increased by 1 million barrels to 213.5 million barrels and distillate inventories, which include diesel and heating oil, rose by 3.4 million barrels to 151.8 million barrels.
The EIA also said wholesale demand for gasoline over the last four weeks fell to nearly 9.1 million barrels per day, which is 3.3 percent less than the same period last year.
The drop is unusual for a week in July, because gas demand is typically strongest during the summer when many Americans take driving vacations, said Tom Kloza, chief oil analyst at OPIS.
The data raised questions about the strength of consumer demand for oil and gas as prices remain high. On Tuesday MasterCard SpendingPulse’s weekly report on retail gas sales showed demand was down for the 18th straight week.
Demand has fallen because the nation is in “some economic muck,” Kloza said.
Energy traders also are monitoring the ongoing congressional debate over raising the nation’s debt ceiling ahead of an Aug. 2 deadline. Default on the nation’s debt could mean higher prices for oil as the dollar falls against other currencies. Oil is priced in dollars and becomes more affordable for investors with foreign currency as the dollar retreats.
In other Nymex contracts for August, heating oil fell 1 cent to $3.1200 a gallon, gasoline rose almost a penny to $3.1015 a gallon and natural gas lost 1 cent at $4.325 per 1,000 cubic feet.