Crude oil supplies rose 1.61 million barrels last week, and fuel consumption was 2.6 percent lower in the four weeks ended Aug. 1 from a year ago, the U.S. Energy Department said yesterday. New York oil futures fell as low as $117.11 a barrel yesterday, 20 percent below the record $147.27 on July 11, a threshold commonly seen as the start of a bear market.
Crude oil for September delivery traded 22 cents, or 0.2 percent higher, at $118.80 a barrel at 12:01 p.m. Singapore time on the New York Mercantile Exchange. Yesterday, oil fell 59 cents, or 0.5 percent, to $118.58 a barrel, the lowest close since May 2.
Oil's decline follows a one-year doubling of prices as the dollar weakened, demand in Asia grew and Iran's nuclear program spurred concern that the country, the Middle-East's second- biggest oil producer, might face a military attack from Israel.
A Turkish section of a BP Plc-led pipeline carrying Azeri oil to Turkey's Mediterranean coast was shut last night after an explosion sparked a fire. Repairs will take at least three to four days, and transportation of oil through the pipeline may be halted until the middle of next week, Mehmet Akif Sam, a spokesman for the Ankara-based Energy Ministry, said yesterday.
U.S. refiners operated at 87 percent of their capacity last week from 87.2 percent a week ago, the Energy Department said. Utilization rates are also down from 91.2 percent about a year earlier, according to Energy Department data. Falling demand for gasoline has prompted U.S. refiners to reduce oil processing rates.
U.S. crude supplies rose to 296.9 million barrels in the week ended Aug. 1, the Energy Department said. Gasoline inventories fell for a second consecutive week to their lowest since June. Fuel demand averaged 20.1 million barrels a day during the four weeks ended Aug. 1.
The dollar had weakened for almost three years, trading at a record low $1.6038 per euro on July 15, drawing investors to energy as a new asset class. Credit restrictions affecting the housing and banking industries are now causing many of these investors to cash out.
The euro traded near a seven-week low against the dollar before a European Central Bank meeting at which President Jean Claude Trichet may keep borrowing costs unchanged and acknowledge economic growth is slowing.
Commodities, as measured by the Reuters/Jefferies CRB Index of 19 raw materials, dropped for a fifth session and touched the lowest in almost four months. The index declined 10 percent in July, the biggest monthly slide in 28 years, and is down 16 percent from a record 473.97 on July 3.