Crude inventories down slightly, but gasoline up

In its weekly report of US oil inventories, the US department of energy said that crude oil inventories stood at 317.8 million barrels, down 2.3 million barrels from the previous week. Gasoline inventories were also down, by 2.1 million barrels as demand was up as people took summer driving holidays.

Distillate stockpiles, however, were up by 3.1 million barrels for the tenth weekly rise in a row. High refining margins in the past three months have taken distillate inventories from relatively low levels to near the upper end of average for this time of year to ease worries that supplies could be tight in the winter when demand for heating oil rises.

Oil prices rose early on Wednesday in response to the drops in crude oil and gasoline stockpiles, but fell later on as investors absorbed the news of the larger distillates inventories. September contracts for Brent crude on the International Petroleum Exchange closed down 2 cents at $58.01 per barrel after having gone as much as 21 cents higher in the middle of the day in London.

On the New York Mercantile Exchange, West Texas Intermediate for September delivery lost 9 cents by mid-afternoon to $59.11. On the other hand, August Nymex gasoline was up 1.87 cents to $1.7145 per gallon and August Nymex heating oil was up 0.73 cents to $1.6100 per gallon.

Gasoline demand in the US remains high at 2.4 percent higher than last year at this time, while diesel fuel demand is up 3.5 percent and jet fuel demand is 3.3 percent higher, despite near-record prices at the pump.