Crude oil benchmarks on both sides of the Atlantic fell on Thursday, with the price of gasoline facing losses for the second day amid worries about demand.
US oil was off by 2.5 per cent in mid-day trading at $48.37 a barrel, while the international benchmark, Brent, declined by 2.3 per cent to $50.63 a barrel.
Traders were focusing on gasoline, one of most important products that crude is refined into. The US Rbob benchmark was off by 3.1 per cent at $1.54 a gallon, on the heels of a drop of 2 per cent on Wednesday.
The fall was driven by Wednesday’s inventory report from a division of the US energy department, that showed a 3.37m-barrel build in gasoline inventories last week — far higher than the 140,450 that analysts had been expecting.
Eric Lee, commodities strategist at Citigroup, noted that the rise in stocks came as “domestic demand and exports flagged”.
The timing of the build in inventories — just before the start of the crucial American summer driving season — was also watched by analysts.
“Refined products demand remains the most important factor and will dictate the direction for the entire crude oil complex at present,” said Michael Loewen, a strategist at Scotiabank.
Mr Loewen reckons that demand may pick up as a result of seasonal affects, as “consumers enter the peak driving season (gasoline) and industrial demand remains robust for distillates in the current economic environment”.