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Oil Weak; Crude Supplies Fall by 800,000

According to the Energy Information Administration, stockpile levels fell by 800,000 barrels.
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NEW YORK (

TheStreet

) -- Crude oil futures cut some losses Wednesday, but continued trading below $75 after the government reported a modest drawdown in crude inventories last week.

According to the Energy Information Administration, stockpile levels fell by 800,000 barrels. The drawdown was far weaker than the 2.25 million barrel drop-off projected by analysts surveyed by Platts. But the EIA number was more bullish than the industry's own assessment released late Tuesday from the American Petroleum Institute, showing last week's crude supplies rising by 5.87 million barrels.

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The September delivery contract, which had been trading close to $74 a barrel before the report, recaptured some of its losses in the immediate aftermath. Most recently, the contract was shedding $1.37 to $74.40 a barrel.

The EIA report also showed gasoline inventories were relatively unchanged last week, despite estimates for those stocks to fall by 1.6 million barrels. Distillates rose by a reported 1.1 million barrels. Platts analysts were looking for a 1.4 million barrel buildup.

Overall, though, Hamza Khan, energy analyst for The Schork Group, was left unimpressed by the government's broad demand assessment.

"It was a pretty bearish report, once you get past crude," Khan said. "Consumer uptake in the products are not happening"

September heating oil futures were losing 2 cents at $2 a gallon, while September gasoline was losing 2 cents to $1.93 a gallon.

Oil-related stocks were the chief drags on the Dow today, as

Exxon Mobil

(XOM) - Get Report

was leading all decliners among the blue chips. Shares were down 1.7% after news spread of a thwarted deal. According to

Bloomberg News,

Kosmos Energy

curtailed the sale of Ghanaian oil fields to Exxon Mobil because of government obstruction. The deal was valued at $4 billion and would have given the integrated global conglomerate a near quarter stake in the Jubilee site,

Bloomberg

reported.

Fellow Dow component

Chevron

(CVX) - Get Report

, too, was shedding 1.5% today.

The NYSE Arca Oil index was declining by 1.3%, and the Philadelphia Oil Service Sector index was losing 1.3%.

Also on the Nymex, September natural gas futures were trading nearly a penny higher at $4.28 a gallon. The EIA will release last week's natural gas storage statistics Thursday morning. Analysts polled by Platts were looking for inventories to see a net injection of 28 billion to 32 billion cubic feet.

--Written by Sung Moss in New York