Crude futures fell Wednesday after US Energy Information Administration data showed a larger-than-expected build in crude stocks, and refined products inventories saw slight increases.
NYMEX October crude settled $1.33 lower at $46.77/b. ICE October Brent settled 91 cents lower at $49.05/b.
NYMEX September ULSD settled 55 points lower at $1.4963/gal. NYMEX September RBOB settled 1.08 cents higher at $1.5096/gal.
Crude stocks increased 2.501 million barrels to 523.594 million barrels in the week that ended August 19, EIA said.
It was the fourth crude build over the last five reporting periods, and was far greater than the 200,000-barrel increase analysts were looking for.
The main factor driving stocks higher was imports, which jumped 449,000 b/d to 8.642 million b/d. That was 9.39% above the year-to-date average of 7.9 million b/d.
Gulf Coast crude runs dropped 244,000 b/d to 8.712 million b/d, leading inventories higher. Severe flooding in the region, which knocked out refineries in Texas and Louisiana, was likely responsible for the downturn.
The same outages were expected to deliver a draw in gasoline stocks of 1.6 million barrels, but instead EIA reported that inventories increased 36,000 barrels to 232.695 million barrels.
"Obviously the market was a little disappointed with the inventory data," Price Futures Group analyst Phil Flynn said.
The severe weather not only impacted Gulf Coast refinery operations, but probably also decreased gasoline demand, accounting for the build, he said.
Gulf Coast gasoline production fell 247,000 b/d to 2.05 million b/d, the lowest since the week that ended June 3.
But the region's gasoline inventories still managed to increase 1.363 million barrels to 77.958 million barrels.
Nonetheless, NYMEX September RBOB was the only contract in the oil complex to settle higher Wednesday.
"With only six trading sessions left before the summer grade gasoline contracts are extinct for the year, spread volatility between September RBOB and all other contracts is likely to remain," TAC Energy said in a note.
Front-month NYMEX RBOB could also be getting support from the threat of more weather-related supply outages, as meteorologists track a tropical disturbance has the potential to strengthen and reach the Gulf Coast next week.
Meanwhile, distillate stocks increased 122,000 barrels last week to 153.257 million barrels, EIA said. Analysts had expected a 350,000-barrel increase.
