West Texas Intermediate crude dropped for a sixth day, following gasoline lower as weak demand weighed on fuel prices.
Gasoline (NYMEX:RBQ14) slipped to a six-month low, reducing the profit refineries make from processing crude into the fuel. Consumption of the motor fuel in the four weeks ended July 25 was the weakest for this time of the year since 2012, according to the Energy Information Administration.
“Gasoline is helping put a lot of pressure on crude,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The fundamental picture remains weak. We have a lot of supplies but tepid demand.”
WTI (NYMEX:CLQ14) for September delivery slid 25 cents to $97.63 a barrel at 9:08 a.m. on the New York Mercantile Exchange. The contract was 80 cents higher than October futures, the narrowest premium since July 16. Prices slid to $97.88 on Aug. 1, the lowest close since Feb. 6.
Gasoline for September delivery slid 0.6% to $2.7287 a gallon on the Nymex after dropping to $2.7126, the lowest intraday level since Feb. 7. The crack spread, a rough measure of the profit from processing a barrel of oil into gasoline, narrowed to $16.97 a barrel, the lowest in a week.
Demand for gasoline fell to an average of 8.95 million barrels a day in the four weeks ended July 25, the EIA, the Energy Department’s statistical arm, reported last week. Inventories rose to 218.2 million barrels, the most since March. Consumption of the motor fuel in the U.S. typically peaks during the summer months.
“We are probably over the hump for summer gasoline demand,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “Demand should be winding down at the end of the month.”
Brent (NYMEX:SCQ14) for September settlement fell 19 cents to $104.65 a barrel on the London-based ICE Futures Europe exchange. It declined to $104.84 on Aug. 1, the lowest settlement since April 2. Volume was 19 percent above the 100-day average. The European benchmark crude was at a premium of $7.05 to WTI on the ICE, compared with $6.96 on Aug. 1.