WTI plunges to session low as inventories data miss forecasts

West Texas Intermediate pared daily gains after trading higher throughout the day as a bearish weekly report by the EIA confounded analysts expectations. Crude and gasoline inventories grew, while distillate fuel supplies fell less than expected.

On the New York Mercantile Exchange, WTI crude for delivery in November traded $103.39 a barrel at 15:07 GMT, up 0.25% on the day. Prices plunged to a session low of $102.84 minutes after the release of the data, while days high stood at $103.96 a barrel. Light, sweet crude plunged to an 8-week low on Tuesday, marking a fourth consecutive daily decline, and trimmed its weekly loss to 1.4% following Wednesdays advance.

Meanwhile on the ICE, Brent futures for November settlement traded at $109.32 a barrel at 15:08 GMT, up 0.64% on the day. Prices held in range between days high and low of $110.08 and $108.70 a barrel respectively. The European benchmark rose by 0.7% on Tuesday and erased its weekly decline following Wednesdays gains.

West Texas Intermediate crude pared daily gains after the Energy Information Administration reported that U.S. crude stockpiles rose by 2.6 million barrels to 358.3 million in the week ended September 20 and moved toward the upper range for this time of the year. Analysts surveyed by Bloomberg expected inventories to decline by 1 million barrels, or 0.3%, to an 18-month low.

Refineries operated at 90.3% of their operable capacity last week, marking a 2.2% decline from the previous reading. Expectations were for a 0.9% fall to 91.6%. Both gasoline and distillate fuel production dropped last week and averaged 9.0 million and 4.8 million barrels per day last week.

The Energy Information Administration also reported that motor gasoline supplies rose by 217 000 barrels to 216.2 million and remained in the upper half of the average range for this time of the year. Analysts surveyed by Bloomberg expected a drop of 750 000 barrels. Meanwhile, distillate fuel inventories decreased by 234 000 barrels, underperforming projections for a 925 000 drop, but remained near the lower limit of the average range.

Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors, said for Bloomberg: “Crude should move lower. We don’t have a shortage here, and the fundamentals are weak.”

On Tuesday, the industry-funded American Petroleum Institute reported that U.S. crude oil stockpiles fell by 54 000 barrels in the week ended September 20. The institute also said that motor gasoline inventories rose by 341 000 barrels and distillate fuel supplies gained 485 000 barrels. However, API’s data is considered as less reliable than EIA’s statistics as it is based on voluntary information from operators of pipelines, refineries and bulk terminals.