Crude prices drop despite decline in oil inventories

Crude oil prices fell Thursday even though the US Energy Information Administration reported that crude oil inventories fell last week instead of rising as expected.

New data from the EIA showed that US crude oil stockpiles dropped by 400,000 barrels last week, against an expected gain of 2.8 million barrels.

Distillates inventories were also down more than expected, falling by 3.3 million barrels when they had been expected to rise by 1.1 million barrels, but gasoline stockpiles were up by 3.9 million barrels last week, more than had been anticipated.

March contracts for West Texas Intermediate crude were down $1.99 to $75.75 per barrel shortly before the close of trade on the New York Mercantile Exchange, while March Brent crude dropped $1.86 to $74.46 per barrel on the ICE Futures Europe exchange in London.

The declines came as the EIA also reported that demand for gasoline and jet fuel were both down, and on proposed new rules for banks, proposed by President Barack Obama, which include limitations on speculation by commercial banks.

The new proposal sent equities markets lower, while prices for oil were also hurt as it remained unclear how commodities markets would be affected if the new rules are adopted.

The EIA said that gasoline demand was down 0.2 percent over the past four weeks from the same period last year, while it also reported that refineries worked at only 78.4 percent of capacity last week, down nearly 3 percent from the week before.

Nymex February gasoline futures were down 5 cents to $2 per gallon while March heating oil also traded at $2 per gallon, down 4 cents.

March natural gas futures, however, added 9 cents, to $5.55 per million British thermal units, after the EIA reported that natural gas stockpiles also suffered a drawdown last week, to below the five-year average.

The price of a gallon of gasoline at the pump in the United States was down overnight, dropping 0.4 cent to $2.733 per gallon on average nationally.