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Oil prices slid after data showed US gasoline stockpiles increased for the first time in nine weeks and as weekly US crude production hit its highest level since August 2015.
Gasoline inventories rose by 1.5m barrels last week, marking the first time since February, according to the US Energy Department’s statistics arm. This was a surprise build compared with expectations of a big drop of 1.9m barrels, according to a Reuters survey.
Analysts raised concerns about whether there would be sustained appetite for refiners to buy crude to turn into products such as gasoline, weighing on prices.
Olivier Jakob at consultancy Petromatrix said: “Refinery runs are quite strong but to sustain this you need to see very strong product and gasoline demand and there is a question here.”
He added: “If demand cannot follow through then can refinery runs can be maintained and the same amount of crude be processed? This is what we are seeing play out right now and it is putting pressure on prices.”
But Paul Horsnell at Standard Chartered said higher gasoline inventories were due to larger than expected imports, meaning US consumers could not absorb the extra 355,000 b/d of imported fuel.
US marker West Texas Intermediate dropped $2.03 a barrel to $50.38, while global benchmark Brent fell $2.01 a barrel to $52.88. Both benchmarks fell to the lowest since the start of the month.
While US crude stocks posted their first back-to-back declines for the year, the report also showed that production rose by 17,000 barrels to 9.252m barrels a day — the highest level since August 2015, according to the weekly numbers.