Oil drops $3/barrel on gasoline inventories, rate hikes and supply recovery

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Oil pump cylinders are seen at the Vaca Muerta shale oil and gas field in the Patagonian province of Neuquen, Argentina January 21, 2019. REUTERS/Agustin Marcarian

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  • Oil prices fall for second session
  • Russia again pumps Nord Stream gas to Europe
  • Libyan NOC restarts production at several oil fields
  • Gazprom resumes gas flows to EU via Nord Stream 1 gas pipeline
  • ECB raises interest rates

NEW YORK, July 21 (Reuters) – Oil prices fell more than $3 a barrel on Thursday on rising U.S. gasoline inventories and after a Central Bank rate hike European Union (ECB) fueled demand concerns, while the return of oil supplies from Libya and Russia’s resumption of gas flows to Europe eased supply constraints.

Brent crude futures settled at $103.86 a barrel, down $3.06, or 2.9%. US West Texas Intermediate crude settled at $96.35 a barrel, down $3.53, or 3.5%.

Both were down more than $5 earlier in the session.

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U.S. gasoline futures settled at $3.15, losing 13 cents, or 3.8% after the stockpiled commodity jumped 3.5 million barrels last week, US government data showed on Wednesday, far exceeding analysts’ forecasts.

“If you don’t need gasoline, then you don’t need crude oil to make gasoline, and that’s the math that’s killing crude oil right now,” said Robert Yawger, Executive Director of Energy Futures at Mizuho.

Oil futures trading volumes have also been weak and prices volatile as traders try to reconcile weaker energy demand with tighter supply resulting from the loss of Russian barrels following the invasion of Ukraine by the country.

Flows through Russia’s Nord Stream 1 gas pipeline, which runs under the Baltic Sea to Germany, have partially resumed after being closed for maintenance on July 11. The pipeline had previously operated with reduced volumes following a dispute sparked by Russia’s invasion of Ukraine.

“The resumption of gas flows from the Nord Stream seems to conjure up images of a more conciliatory attitude on the part of Russia regarding the continued movement of crude and products to Europe in the weeks/months to come,” he said. said Jim Ritterbusch of Ritterbusch and Associates in a note. Read more

The European Central Bank joined many other central banks on Thursday in raising interest rates, focusing on tackling runaway inflation rather than the economic slowdown, which may weigh on demand for oil. Read more

The Bank of Japan kept interest rates extremely low to stimulate stalled economic growth. Read more

On Wednesday, Libya’s National Oil Corp (NOC) said crude production resumed at several oilfields after force majeure on oil exports was lifted last week.

Reduced throughput on one of Canada’s main oil export arteries, the Keystone Pipeline, is expected to have only a slight impact on oil deliveries, analysts said.

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Additional reporting by Shadia Nasralla and Rowen Edwards in London and Florence Tan in Singapore; Editing by David Gregorio and Lisa Shumaker

Our standards: The Thomson Reuters Trust Principles.

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