LONDON: Oil prices settled down more than $5 on Wednesday as fuel demand destruction and a bleaker macroeconomic picture took centre stage in the day’s trade.
Brent crude oil futures settled down 5.11, or 5.6 per cent, to $85.81 a barrel while US West Texas Intermediate crude (WTI) fell $5.01, or 5.6pc, to $84.22.
At their session lows, both benchmarks were down by more than $5, and heating oil and gasoline futures also fell by more than 5%. Crude oil prices have fallen by about $10 since last week’s settlement.
Finished motor gasoline supplied, a proxy for demand, fell last week to about 8 million bpd, its lowest since the start of this year, the US Energy Information Administration (EIA) reported Wednesday.
Some of that demand destruction could be due to torrential rains which brought flooding to New York last Friday and post-tropical storm Ophelia, which doused the Northeast with torrential downpours in late September, said Bob Yawger, director of energy futures at Mizuho.
Seasonally, U.S. gasoline consumption is at the lowest level in 22 years, according to commodity analysts at JP Morgan.
A 30pc spike in fuel prices in the third quarter of this year depressed demand, resulting in a counter seasonal plunge of 223,000 barrels per day, the analysts wrote in a Wednesday note. Gasoline stocks rose by 6.5 million barrels, far exceeding expectations of a rise of 200,000 barrels.
Published in Dawn, October 5th, 2023
