Crude Oil Futures Surrender Gains in Early Asian Trade

Forexpros - Crude oil futures retreated in Asian trade Thursday, getting an earlier spike on reports that U.S. gasoline supplies fell to their lowest level since June of 2009.

On the New York Mercantile Exchange light, sweet crude futures for October delivery traded at USD87.39 a barrel during early Asian trade, falling 0.27%, after hitting a daily high of USD87.71.

A U.S. Energy Information Administration report, released earlier Wednesday, showed a sharp drop in gasoline inventories last week, with supplies falling by 3.5 million barrels, far below economist’s forecasts of a 2 million barrel drop.

Crude oil inventories last week, however, rose by 4.2 million barrels, exceeding market expectations of a 0.5 million barrel decline.

Commercial crude inventories have been on the rise, as the U.S. government continues to release supplies from the Strategic Petroleum Reserve in effort to make up for diminished output from Libya due to ongoing military unrest.

Adding to concerns of a slowdown in global energy demand, the U.S. Bureau of Labor Statistics reported that its producer price inflation index rose by 0.2% in July, after a 0.4% decline the previous month. Market expectations were for a July increase of 0.1%.

The core PPI, which excludes food and energy costs, increased by 0.4% in July. suggesting that lower oil prices have not yet been digested throughout the U.S. economy and have therefore not had a chance to stimulate demand.

Meanwhile, the U.S. dollar rose against its counterparts, with the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, adding 0.16% to 73.92.

Dollar-denominated oil futures tend to fall when the dollar gains, as it makes oil more expensive for buyers in other currencies.

On the ICE Futures Exchange Brent oil futures for October delivery fell 0.16% to trade at USD110.53.