Oil Prices Slip as Traders Mull U.S. Supplies, Global Crises

By Daniel HuangDow Jones Newswires

Oil prices ended lower Thursday despite shrinking U.S. crude supplies and crises in Eastern Europe and the Middle East.

Light, sweet crude for September delivery fell $1.05, or 1%, at $102.07 a barrel, the lowest closing price since July 16 on the New York Mercantile Exchange. Brent crude on the ICE Futures Europe exchange fell 96 cents, or 0.9%, to $107.07 a barrel.

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U.S. crude-oil stockpiles dropped by almost 4 million barrels last week, the U.S. Energy Information Administration said Wednesday. The slide included a 1.5 million-barrel decline in supplies at Cushing, Okla., the delivery point for Nymex crude futures.

However, stocks of gasoline and distillates--both refined from crude oil--saw increases in supply. The government report indicated a 3.4 million-barrel rise in gasoline stockpiles, higher than the 900,000-barrel gain analysts surveyed by The Wall Street Journal had expected. Distillates rose by 1.6 million barrels, compared with the 1.9 million-barrel rise analysts had predicted.

"Demand for gasoline and distillates is the dark cloud," said John Kilduff, founding partner of Again Capital LLC in New York. Refineries are running at the highest rate in eight years, causing a surge in crude-oil consumption, but Mr. Kilduff said the markets are looking past that to weaker demand for the refined products.

Refining capacity utilization was at 93.8% of capacity, unchanged from a week ago.

On the global front, traders appear to be waiting for new developments before placing their bets, analysts said.

"Most of the rise that we saw in recent weeks was because of the tension and uncertainty in so many places in the world," said Sal Gilbertie, founder of Teucrium Trading LLC in Vermont. Brent crude, the global benchmark, peaked above $115 a barrel in mid-June.

Although headlines continue to report violence in Israel, Ukraine and Iraq, "the markets are getting smarter and asking, 'Is this going to actually affect the oil supply or not?'" Mr. Gilbertie said.

Front-month August reformulated gasoline blendstock, or RBOB, lost 2.33 cents, or 0.8%, at $2.8368 a gallon. August diesel lost 0.45 cent, or 0.2%, to $2.8709 a gallon.