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February 28, 2021
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Oil down about 4 percent; gasoline drop adds to China, Iran worries

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Image: An offshore oil platform is seen at the Bouri Oil Field off the coast of Libya August 3, 2015. REUTERS/Darrin Zammit Lupi


By Barani Krishnan

NEW YORK (Reuters) – Crude oil fell about 4 percent on Monday after a tumble in gasoline futures added pressure to a market slumping on slower growth in China and signs that Iranian oil will return to the market soon following implementation of its nuclear deal.

A stronger dollar and softer equity markets on Wall Street added weight to the petroleum complex, traders said.

“The products markets seem to be taking a hit over concerns the refinery maintenance season has peaked, and there could only be inventory builds from here,” said Pete Donovan, a broker at New York’s Liquidity Energy.

U.S. crude inventories rose by 3.7 million barrels last week, which would be the fourth consecutive weekly increase, according to average expectations of analysts polled by Reuters.

The poll showed draws for gasoline and distillate stockpiles as it predicted a half percentage point drop in refinery utilization from the previous week’s 86 percent. Analysts said they expect refinery runs to pick up soon as autumn maintenance works end.

The front-month in Brent, the global crude benchmark, settled down $1.85, or 3.7 percent, at $48.61 a barrel.

U.S. crude’s front-month settled down $1.37, or 3 percent, at $45.89, in lighter volume trades ahead of Tuesday’s expiry for November as the spot contract.

Gasoline tumbled 5 percent on worries U.S. refinery utilization could pick up with declining maintenance work. Ultra-low sulfur diesel fell nearly 3 percent.

Both gasoline and diesel prices came off their lows briefly on news that Phillips 66’s 275,000-barrel-per-day Bayway refinery in Linden, New Jersey, one of the largest on the U.S. East Coast, was shut after a transformer malfunction. The company later said the refinery was “stable” and running at “reduced rates on an interim basis”, prompting prices to turn lower again.

The refining profit for gasoline, known as the gasoline crack , hit a nine-month low.

China’s economy grew at the slowest pace in six years in the third quarter, official data showed. Chinese oil demand also fell slightly in September.

Iran’s nuclear negotiator said on Monday he was hopeful for an implementation of the nuclear deal between Tehran and Western powers before the end of the year. Iran expects to boost production by 500,000 barrels a day within a week of the sanctions being lifted.

The North Sea’s Buzzard oilfield, the largest contributor to the Forties crude stream that helps to set the global oil price, meanwhile, ramped up production after a four-day outage.

(Additional reporting by Karolin Schaps in London and Keith Wallis in Singapore; Editing by W Simon, David Gregorio and Paul Simao)

Copyright 2015 Thomson Reuters. Click for Restrictions.

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