U.S. oil prices fell sharply Thursday after a weekly report showed U.S. inventories of petroleum products are already starting to rise now that summer is ending and the lower-demand fall season is near.
Light, sweet crude for October delivery fell 1.4% to close at $67.77 a barrel on the New York Mercantile Exchange. Brent crude, the global benchmark, lost 1% to $76.50 a barrel.
The Energy Information Administration said Thursday that crude-oil inventories fell by 4.3 million barrels last week. And while that data point alone is bullish, the report also showed gasoline and distillates inventories rose by a combined 5 million barrels, and the grand total of crude oil and processed petroleum products rose by a bearish 3.6 million barrels.
“The fundamentals are starting to get a little bit questionable,” said Ric Navy, senior vice president for energy futures at R.J. O’Brien & Associates.
The EIA report also showed U.S. crude oil exports fell by 271,000 barrels a day last week, to 1.5 million barrels a day.
Mr. Navy said Thursday’s report on U.S. oil inventories wasn’t the only factor in oil’s decline, noting overall global demand is also becoming a bigger concern. “There are more clouds as far as economies go, and the tariff disputes are also a factor.”
Alfonso Esparza, senior analyst at foreign-exchange trading group Oanda, said additional tariffs may hurt demand for oil.
“The threat of a new round of tariffs on Chinese goods looms over the market,” Mr. Esparza said. “China is expected to retaliate, escalating the trade war between the two economies and dragging down global growth forecasts.”
The sharp drop in prices represents a quick reversal from earlier in the week, when prices jumped Tuesday on short-term supply concerns as tropical storm Gordon in the U.S. Gulf Coast was seen hitting oil production and refining activity. But the storm failed to strengthen into a hurricane, proving much less problematic for U.S. oil-and-refining operations than many investors feared.
“I believe the main reason [for Thursday’s price decline] is a correction after prices rose ahead of Gordon,” said Bernadette Johnson of Drillinginfo. “The storm was priced in, but then changed course and prices came back down a bit.”
Oil-market participants are now looking ahead to monthly reports out next week from the International Energy Agency and the Organization of the Petroleum Exporting Countries, with an eye to how much OPEC’s output increased last month.
OPEC and its partner producers, including Russia, agreed in late June to start ramping up production in July after more than a year of holding back output. The move helped to cap rapidly rising prices.
Among refined products, gasoline futures for October delivery fell 0.7% to $1.9510 a gallon. Diesel futures declined 1.1%, to $2.2091 a gallon.