Oil drops ahead of U.S. fuel data Wed Aug 8, 12:49 AM ET

Oil drops ahead of U.S. fuel data Wed Aug 8, 12:49 AM ET



SINGAPORE - Oil prices fell Wednesday as traders awaited the release of a U.S. government fuel stocks report expected to show gasoline inventories rose last week.

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Light, sweet crude for September delivery dropped 22 cents to $72.20 a barrel in Asian electronic trading on the New York Mercantile Exchange, midmorning in Singapore. The contract rose 36 cents to settle at $72.42 a barrel on Tuesday.

The report from the U.S. Energy Department's Energy Information Administration, due later in the session, was expected to show another drop in crude oil inventories, and increases in both refinery activity and gasoline supplies, according to a Dow Jones Newswires survey of analysts.

After last week's report showed a surprisingly large drop in oil inventories, oil rallied to a new all-time high of $78.77 a barrel. But crude gave up those gains in the same session as investors came to view the increase in gasoline production as more important.

Several weeks of growing gasoline supplies and refinery activity have alleviated some supply concerns, sending gas futures and retail prices sharply lower. That trend is expected to continue. Analysts surveyed by Dow Jones, on average, expect refinery utilization to have grown by 0.1 percentage point to 93.7 percent of capacity in the week ended Aug. 3.

That increased activity drew down crude inventories by 2 million barrels last week, and increased gasoline supplies by 1 million barrels, analysts say. Distillates, which include heating oil and diesel fuel, were expected to have gained 1.8 million barrels.

September Brent crude fell 38 cents to $71.42 a barrel on the ICE futures exchange in London.

Some analysts see the recent price declines as a correction in a bullish market, driven largely by speculators selling off positions to lock in profits.

Oil futures were supported by news that ConocoPhillips shut down gasoline-producing equipment at two New Jersey refineries.

Heating oil futures lost 0.56 cent to $1.9585 a gallon while gasoline prices lost 0.41 cent to $1.9401 a gallon.

Natural gas futures rose 5.1 cents to $6.252 per 1,000 cubic feet.