Key oil futures contracts, which had been trading higher since Asian markets opened, plunged after the US Department of Energy reported its latest weekly petroleum data for the world’s largest consumer of crude oil.
US benchmark West Texas Intermediate for August delivery tumbled $2.29 to $45.14 a barrel on the New York Mercantile Exchange, its lowest price in nearly two months.
In London, Brent North Sea oil for September delivery, the global benchmark, finished at $46.40 a barrel, down a hefty $2.40 from Wednesday’s settlement.
US commercial crude inventories fell by 2.2 million barrels in the week ending July 1. The market was expecting a larger decline of 2.5 million barrels, according to Bloomberg News.
At 524.4 million barrels, US crude oil inventories are at historically high levels for this time of year, the DoE noted.
The DoE also reported a much smaller than expected decline in gasoline inventories during the peak summer holiday driving season. Gasoline stockpiles fell by 100,000 barrels, missing the 350,000 forecast.
In general, the more important official oil data came in below bullish industry figures released by the American Petroleum Institute after markets closed Wednesday.
“Yesterday we had API come out and give us close to a seven-million barrel draw in crude with huge draws in gasoline and distillates. Today we had a much more temperate report from DoE,” said Mike Dragosits of TD Securities.
“We should be at much sharper levels of drawing… we’re at peak draw period,” he said.
A bright spot in the DoE data was a modest decline in US crude oil production, continuing a recent trend that has some investors hoping it will help to ease the global oversupply.
Producers pumped out 8.43 million barrels per day, 194,000 less than the prior week. The four-week average was down 10.3 percent.