Updated from 12:37 p.m. EDT
Oil fell Thursday as traders weighed overseas currency developments against evidence of an improving supply picture in crude and distillate fuels.
Crude for September delivery closed down 89 cents to $57.13 on Nymex. Gasoline futures dropped 1 cent to $1.66 a gallon.
The Energy Department said Wednesday that crude stocks, which were at the upper end of a seasonal average, dropped less than expected last week as refiners' utilization rate fell to 92.8%.
Distillates inventories increased by another 2.3 million barrels, a ninth consecutive increase. Concerns over sufficient distillates supplies ahead of the peak winter demand season were a major contributor to the recent rise in energy prices.
Thursday's selling pressure was tempered, however, by China's decision to loosen the yuan's peg against the U.S. dollar. The action, which will initially result in a nominal appreciation in the yuan, is being viewed as a symbolic first step toward the introduction of market forces into China's currency regime.
Most economists believe the yuan would rise if it were allowed to float freely against world currencies, a step that is still a long way off. Since oil is priced in dollars, a stronger domestic currency would make the commodity cheaper in China, theoretically boosting demand.
But a stronger yuan could also crimp economic growth in China, and that might hurt demand.
The International Energy Agency and OPEC said in recent reports that global oil demand growth will slow in 2005, primarily because of a slowdown in Chinese consumption growth.
Wenchao Su, oil analyst at ESAI said that in the short term, the yuan revaluation could provide an incentive for Chinese refineries to buy more crude and step up production. But for the long term, less income from its exports could weaken its economy.
In earnings Thursday,
, which provides deep-sea drilling equipment to oil and gas producers, said its second quarter net income doubled to $38.6 million, or 70 cents a share. The results beat analysts' expectations for 61 cents a share in second quarter earnings.
Cooper provided full-year guidance of $2.75 to $2.85 a share, higher than its previous estimate of $2.45 to $2.60 a share.
The company said it generated nearly $156 million of free cash flow during the first half of 2005, compared with approximately $45 million in the first half of 2004, which it plans to use for upgrading of its facilities as well as for buying back shares.
One notable segment is its major subsea systems project, which generated record orders of $1.1 billion in the second quarter, more than double from last year. Cooper Cameron competes directly with
in the subsea systems niche.
Shares of Cooper Cameron rose 68 cents, or 1%, to $66.53.
Among the major oil producers shares fell, pulling down the Amex Oil Index 1%.
( RD), dropped 1%, and