WTI trimms daily gains on weak inventories data, Obama delays Syria decision

Both WTI and Brent benchmarks trimmed daily gains after the Energy Information Administration said in its weekly report that U.S. crude inventories fell less than expected last week. Gasoline supplies confounded expectations and surged, while distillate fuel stocks rose more than anticipated. Easing tension in Syria continued to pressure the market.

On the New York Mercantile Exchange, WTI crude for October delivery fell to $107.37 per barrel at 14:53 GMT after reaching $107.77 before the release of the report. Days high stood at $108.00, while days low was touched at $106.58 in Asian trading. The American benchmark slipped 1.2% on Tuesday and extended its weekly decline to 2.6%.

Meanwhile on the ICE, Brent oil for delivery in October traded at $111.38 per barrel at 14:59 GMT, up 0.11% on the day. Prices held in range between days high and low of $112.50 and $111.03 a barrel. The European benchmark lost lost 1.5% on Tuesday and has fallen nearly 4% so far this week.

Oil prices extended losses following a disappointing report by the Energy Information Administration. The agency reported that U.S. crude oil inventories fell by 219 000 barrels to 360 million during the week ended September 6. Analysts surveyed by Bloomberg expected a 2.1 million barrels drop. Refineries utilization rose by 0.8% to 92.5%. Both gasoline and distillate fuel production remained unchanged last week and averaged 9.1 million and 5.0 million barrels per day, respectively.

The EIA also reported that U.S. motor gasoline inventories rose by 1.7 million barrels to 217.6 million, confounding analysts projections for a 1 million barrels drop, and remained in the upper limit of the average range for this time of the year. At the same time, distillate fuel supplies rose by 2.6 million barrels last week to 132.2 million, underperforming projections for a 600 000 barrels increase, but remained near the lower limit of the average range. Total products supplied over the last four weeks rose by 1.7% from a year earlier and averaged 19.0 million barrels per day.

On Tuesday, the industry-funded American Petroleum Institute reported that U.S. crude stockpiles fell by 2.93 million barrels, while gasoline inventories rose by 195 000 barrels. Distillate fuel supplies increased by 807 000 barrels. API’s data however is considered as less reliable than EIA’s statistics as it is based on voluntary information from operators of refineries, pipelines and bulk terminals.

Vote for strike on Syria postponed

Both benchmarks continued to be pressured on receding concern that the U.S. will launch a punitive attack against Syria and the conflict might spill to neighboring major oil producers.

On Tuesday, Foreign Minister Walid al-Muallem said during a trip to Moscow that Syria accepted Russia’s proposal for granting international control over its chemical weapons as a way for peacefully resolving the conflict with the U.S. and averting military intervention.

“Yesterday we had a round of very fruitful negotiations with Foreign Minister Sergei Lavrov and he proposed an initiative concerning chemical weapons,” al-Muallem said. “And already by the evening we agreed to the Russian initiative.”

President Barack Obama asked Congress in a televised address to the nation later on Tuesday to delay voting for authorization of military action against Syria, seeking a diplomatic resolution to the problem. “It’s too early to tell whether this offer will succeed, and any agreement must verify that the Assad regime keeps its commitments,” Obama said. “The initiative has the potential to remove the threat of chemical weapons without the use of force, particularly because Russia is one of Assad’s strongest allies.”

Phil Flynn, senior market analyst at the Price Futures Group in Chicago, commented for Bloomberg: “Obama’s decision has taken some risk premium off the market. The market is now focusing on supplies and fundamentals.”