06 August 2015, News Wires – Oil hovered near multi-month lows on Thursday with Brent under $50 a barrel after investors sold crude on worries about rising US gasoline inventories as peak summer demand comes to an end.
Gasoline stocks in the US rose more than expected, overriding a bullish picture from a larger-than-expected drop in crude stockpiles and pushing prices down overnight to multi-month lows.
“We’re talking about September crude runs now and that’s pretty much past summer,” said Tony Nunan, a risk manager at Mitsubishi.
“The US has (cheap) crude supply and can keep runs high but the rest of the world is not looking so good … We remain oversupplied and world-wide inventories are high.”
September Brent crude gained 12 cents at $49.71 a barrel by early on Thursday after dropping to $49.02 on Wednesday, the lowest since 30 January.
US crude edged up 2 cents at $45.17 a barrel, after touching an intraday low of $44.83 in the previous session, the weakest since 20 March.
“We are probably getting close to the bottom. At $40, in the longer term, a lot of projects don’t make sense,” Nunan said.
US crude inventories fell 4.41 million barrels, nearly three times more than the 1.5-million-barrel drop analysts had expected, data from the Energy Information Administration (EIA) showed on Wednesday.
Gasoline stocks rose by 811,000 barrels, the EIA said, compared with analysts’ expectations in a Reuters poll for about a 500,000-barrel drop.
Investors are also eyeing key jobs data due on Friday in the US that could re-affirm that the Federal Reserve is likely to raise interest rates in September.
A rate hike would likely strengthen the greenback, a negative for dollar-denominated oil because it becomes more expensive for holders of other currencies.
Technical charts showed Brent may retest support at $48.98 a barrel, with a break below that indicating prices could test the next support at $47.71, Reuters market analyst Wang Tao said.
US crude is expected to fall further to $44.31 a barrel as it has pierced below support at $45.17, Wang said.