U.S. oil inventories drop for a fourth week

According to the Energy Information Administrations weekly report, U.S. oil inventories fell for a fourth straight week to the lowest level since January, indicating consistent demand in the worlds top consumer. Gasoline and distillate fuel stockpiles also decreased, confounding analysts expectations.

On the New York Mercantile Exchange, WTI crude for September delivery traded at $106.40 a barrel at 15:08 GMT, down 0.77% on the day. Prices ranged between days high and low of $107.53 and $106.27 per barrel respectively. Light, sweet crude has declined 1.6% so far this week after gaining more than 14% in the past four.

Meanwhile on the ICE, Brent oil for September delivery stood at $107.52 per barrel at 15:09 GMT, down 0.83% on the day. The European benchmark shifted between days high and low at $108.60 and $107.26 a barrel. Brent declined two days out of three and has fallen 0.8% so far this week after slipping 0.55% the previous one.

In its weekly oil reserves report, the EIA said U.S. Crude Oil Inventories fell by 2.8 million barrels, or 0.8%, during the week ending July 19, matching analysts projections. Total crude reserves stood at 364.2 million, the lowest since January. Refineries operated at 92.3% of their operable capacity last week, above projections for 91.9% but below the preceding periods 92.8%. Gasoline production increased, while distillate fuel output decreased, averaging 9.2 million and 5.0 million barrels per day respectively.

Total U.S. gasoline stockpiles decreased by 1.4 million barrels, or 0.6% and confounded analysts expectations for a rise, but remained above the upper limit of the average range. Meanwhile, distillate fuel inventories also refuted projections for a surge and fell by 1.2 million barrels, remaining near the lower limit of the average range.

According to a Bloomberg survey prior to the Energy Information’s report, U.S. crude oil inventories were expected to have fallen by 2.8 million to 364.2 million barrels last week, matching EIAs statistics. Gasoline reserves were expected to have risen by 1.65 million barrels and distillate fuel stockpiles were supposed to have added 1.85 million. Both were rebutted.

U.S. and China data weighed on prices

Oil however was pressured earlier as positive U.S. data supported the dollar, thus pushing dollar-denominated commodities down. July’s Markit Flash U.S. Manufacturing PMI surpassed analysts’ expectations and surged to 53.2, compared to June’s final estimate of 51.9 and projections for a rise to 52.6.

Meanwhile, the Commerce Department reported that June’s New Home Sales also surpassed anticipations for an increase to 0.484 million and surged to 0.497 million. May’s reading was revised downwards to 0.459 million from 0.476 million new homes sold.

Oil was also pressured today as data showed China’s vast manufacturing sector decelerated to an 11-month low in July according to the flash HSBC/Markit PMI. The index fell to 47.7, compared to June’s final reading of 48.2 and if confirmed in the final report on August 1, it will be the lowest in 11 months. Readings below 50 indicate contraction in the respective sector.

Meanwhile, a sub-index that measures employment fell for a fourth consecutive month below 50 to 47.3 in July, below June’s 47.7 reading and the the weakest since March 2009. Both negative and positive data about the state of the Chinese economy have a strong influence on oil pricing as the Asian country accounted for 11% of global consumption in 2012, according to BP Plc’s Statistical Review of World Energy.