WTI crude falls to 1-week low on rising US fuel supply

West Texas Intermediate crude fell to a one-week low on speculation that increasing US fuel inventories will prompt refineries to reduce processing rates. Brent oil was steady as fighting continued in eastern Ukraine.

US gasoline supplies rose to a four-month high in the week ended July 18, as use slipped, government data released July 23 show.

Crude stockpiles at Cushing, Oklahoma, tumbled to the lowest level since November 2008.

President Barack Obama said he expected the downing of the Malaysian Air jet in Ukraine to push European countries to enact tougher sanctions against Russia.

“The gasoline picture looks pretty grim,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “The drop in Cushing supplies was the dominant theme right after Wednesday’s report but the focus has changed. It’s the middle of the summer and gasoline supply is rising while demand is weak, which isn’t good for refiners.”

WTI for September delivery dropped 86 cents, or 0.8 percent, to $101.20 a barrel at 9:33am on Friday on the New York Mercantile Exchange. Futures touched $101.05, the lowest intraday price since July 16. The September contract is down 0.8 percent this week.

Brent for September settlement slipped 9 cents to $106.98 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a $5.78 premium to WTI, up from $5.

US gasoline inventories rose 3.38 million barrels to 217.9 million last week, according to the Energy Information Administration. Supplies of distillate fuel, a category that includes diesel and heating oil, advanced 1.64 million barrels to 125.9 million, the most since October.

A measure of gasoline consumption decreased by 265,000 barrels a day to 8.79 million, the least in six weeks, according to the Energy Department’s statistical arm.

The nation’s peak-demand summer driving season typically starts on Memorial Day at the end of May and runs through to Labour Day in early September.