Oil prices eased off a five-month high, marking at least a temporary pause in a rally led by a sharp fall in U.S. distillate stocks which has driven up refining margins, causing a jump in demand for crude globally.
Brent crude, the global oil benchmark, fell 0.3% to $56.14 a barrel on London's ICE Futures exchange, having risen around 7% since the start of the month. On the New York Mercantile Exchange, West Texas Intermediate futures also fell 0.3% to $50.52 a barrel.
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U.S. stocks of oil products including distillates and gasoline have been falling since Hurricane Harvey disrupted many refiners' activities since late August. The Energy Information Administration reported that distillate stockpiles fell 5.7 million barrels in the week ended Sept. 15.
"All refineries around the globe will try to maximize runs to replace the deficit of distillate and that is making for higher seaborne crude oil demand," said Olivier Jakob, managing director at oil consultancy Petromatrix.
The EIA data showed crude oil stocks rose, however, as refinery utilization rates had not yet resumed to pre-storm levels.
"This means that there is less demand for U.S. crude, but on the other hand a shortage of refined productions, explaining the current product price level," said consultancy Global Risk Management in a note.
Investors will be monitoring a meeting of the Organization of the Petroleum Exporting Countries and other major producers on Friday, where the continuing production cap agreement will be discussed.
The independence referendum in Iraq's Kurdistan on Monday will also be watched closely due to the large volume of oil exports from the region. There has been international opposition to the referendum, and how Turkey reacts to the outcome could be key, given the vast majority of Kurdistan's oil exports pass through Turkey, Mr. Jakob said.
Nymex reformulated gasoline blendstock--the benchmark gasoline contract--fell 1% to $1.64 a gallon. ICE gasoil changed hands at $538.50 a metric ton, up $1.50 from the previous settlement.
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(END) Dow Jones Newswires
September 21, 2017 07:14 ET (11:14 GMT)