(Updates prices to settlement, rewrites throughout)
By Lorenzo Ligato
NEW YORK Aug 6 Oil prices fell on Wednesday as
abundant supplies in the United States drove the U.S. contract
to its lowest close in six months, while Brent prices floundered
near nine-month lows.
Prices saw some early support from a U.S. government report
showing that U.S. crude inventories fell 1.8 million barrels
last week and gasoline stocks dipped sharply. But the oil drop
was smaller than the one reported by the American Petroleum
Institute on Tuesday and not large enough to stem a recent drop
in prices prompted in part by ample domestic stockpiles.
Crude stocks at Cushing, Oklahoma, the delivery hub for the
U.S. crude contract, rose by 83,000 barrels, which also
"The general trend is definitely downwards," said Tariq
Zahir, an analyst at Tyche Capital Advisors in New York.
"Cushing stocks got to a point were they can't go down much
further. If we continue to see a build, that could open the
floodgates to even lower prices."
U.S. crude for September delivery lost 46 cents to
settle at $96.92 a barrel, its weakest settlement since Feb. 3.
Brent crude oil lost 2 cents settle at $104.59 a
barrel, its lowest close since Nov. 7.
The spread CL-LCO1=R between the two benchmarks closed at
Both Brent and U.S. crude had a modest rebound shortly after
the release of the EIA data, as an unexpectedly steep drop in
gasoline stocks, which fell 4.4 million barrels, pointed to
stronger demand for gasoline in the United States.
The drop in U.S. inventories came after upbeat U.S. economic
data this week showing a spike in service-sector activity to a
nine-year high and a surprisingly large increase in factory
orders, possible signs of better oil demand to come.
But the rebound halted in the afternoon and both benchmarks
pared gains shortly after reports emerged that near 100
rail-cars arrived at the Stroud, Oklahoma unloading facility on
Wednesday, the first train to arrive this month at the terminal
connected to Cushing.
Oil prices have fallen more than $10 a barrel over the past
six weeks, as global supply has exceeded demand, building up a
glut in the Atlantic Basin and Asian markets.
Despite prolonged violence in several key oil-producing
regions, traders have become increasingly nervous about weak
seasonal demand and poor refinery margins in a global market
that is well supplied with high quality, light crude oil.
Yet, geopolitical risk continues to bubble under the
surface, with escalating tensions in Libya, Iraq and Russia.
"Worries over Russia's intentions in Ukraine are limiting
factors for oil prices today, but the fact remains that any
escalation in tensions with Russia put substantial volumes of
oil supply at risk," said Tim Evans, Energy Futures Specialist
at Citi in New York.
(Additional reporting by Jacob Gronholt-Pedersen in Singapore,
David Sheppard in London and Robert Gibbons in New York; Editing
by Marguerita Choy, Edward McAllister, Bernadette Baum and Chris