Rising gas inventories hit WTI

West Texas Intermediate (NYMEX:CLQ14) headed for the third weekly decline this month amid speculation that rising U.S. gasoline stockpiles signal reduced demand in the world’s biggest oil consumer. Brent (NYMEX:SCQ14) was steady in London.

Futures declined as much has 0.5 percent in New York, and were poised for a weekly loss of 1.4 percent. Gasoline inventories climbed to the highest level since March, while crude supplies dropped for a fourth week, Energy Information Administration data showed on July 23. President Barack Obama said he expects the downing of the Malaysian Air jet in Ukraine to push European nations toward tougher sanctions against Russia.

“U.S. refineries are clearly turning more crude oil into refined petroleum products at present than is actually needed,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said by e-mail. “The build in gasoline inventories significantly exceeded expectations. Besides the increase in production, this was also due to weaker demand.”

WTI for September delivery fell as much as 51 cents to $101.56 a barrel in electronic trading on the New York Mercantile Exchange, and traded for $101.66 at 1:11 p.m. London time. The contract slid $1.05 to $102.07 yesterday, the lowest close since July 16. The volume of all futures traded was 10 percent above the 100-day average for the time of day.

Brent for September settlement was 11 cents higher at $107.18 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $5.48 to WTI on ICE, compared with $5.29 at the end of last week.

Fuel supplies

U.S. gasoline inventories expanded by 3.38 million barrels to 217.9 million in the seven days through July 18, according to the EIA, the Energy Department’s statistical arm. A measure of consumption decreased by 265,000 barrels a day to 8.79 million, the lowest rate in six weeks.

The nation’s peak summer driving season typically starts on Memorial Day at the end of May and runs through to Labor Day on Sept. 1.

“We did see a draw in crude inventory, but that just fed into larger stockpiles of gasoline, pointing to demand growth not being there,” Ric Spooner, a chief strategist at CMC Markets in Sydney, said by phone.

WTI may advance next week amid shrinking crude supplies at Cushing, Oklahoma, the delivery point for New York-traded futures, according to a Bloomberg News survey. Seventeen of 38 analysts and traders, or 45 percent, predicted futures will gain while eight respondents said prices will fall. Supplies at the biggest U.S. oil-storage hub have declined to 18.8 million barrels, the least since November 2008.

Russia sanctions

Brent is little changed this week after rebounding 0.5 percent through July 18. Malaysian Air Flight 17 was shot down over rebel-held territory in eastern Ukraine, killing all 298 passengers and crew and deepening the worst crisis between the West and Russia since the end of the Cold War.

Russia is the world’s biggest energy exporter. The Obama administration on July 16 imposed sanctions on Russian companies to punish the country over Ukraine, limiting their access to U.S. equity and debt markets. The European Union is preparing to penalize Russia’s most senior spies and security officials and has laid out options for applying sanctions to banks.

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