Oil Prices Slip on New EIA Data

Crude prices are falling at the New York Mercantile Exchange Thursday after the Energy Information Administration reported that the damage Hurricane Gustav dealt to U.S. petroleum stores in the last week of August was largely counterbalanced by significant declines in demand for oil, gasoline and other prominent energy commodities.

The October West Texas crude contract was recently losing $2.34 at $107.01 a barrel, and Brent was down nearly $2.50 at $105.61 a barrel.

Reformulated gasoline was falling 7 cents at $2.70 a gallon, heating oil was sliding 6 cents at $3.02 a gallon, and natural gas was down more than 20 cents at $7.06 per million British thermal units.

The EIA said that falling petroleum imports were largely responsible for the 3.6-million-barrel decline in commercial petroleum inventories during the week ending Aug. 29.

Motor gasoline inventories fell 1 million barrels for the week, and distillate fuel inventories also declined.

However, refinery utilization eked out a surprise gain last week to 88.7% from 87.3% after falling the previous four weeks, and domestic motor gasoline production rose more than 300,000 barrels a day from the previous week to 9.4 million barrels per day.

Amazingly, even the threat of an oncoming hurricane in the Gulf of Mexico couldn't convince U.S. businesses and consumers to stock up on gasoline and other petroleum products to be safe. The EIA said motor-gasoline demand was down 1.6% from the same four-week period in 2007, while demand for distillate fuel was 2.7% lower and jet fuel markets took a 9.3% hit to consumption.

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