The price of oil has fallen to US$45.15 per barrel, the lowest since March 19 this year, due to the falloff demand for motor fuels.
U.S. crude stocks fell last week, while gasoline and distillate inventories rose, data from the Energy Information Administration showed Wednesday.
Crude inventories fell by 4.4 million barrels in the last week, compared with analysts’ expectations for a decrease of 1.5 million barrels.
EIA also reported Wednesday U.S. refiners ran at their highest rates last week since 2005. The utilization rate for U.S. refiners was 96.1 percent, the highest since August 2005
Growing oversupply, slowing demand from China and the prospect of crude flooding onto the market from Iran after Tehran’s deal with the West over its nuclear program have knocked 21 percent off the oil price this quarter.
“The overarching theme in the oil market … is the status of U.S. oil supply and whether or not we’ll be facing an imminent decline and the latest weekly data hasn’t brought any comfort relative to those kind of expectations,” BNP Paribas oil analyst Harry Tchilinguirian said.
Oil inventories as reported by the EIA have fallen for two weeks in a row at a much faster rate than expected, but stocks are still just 6 percent below April’s record high.
The dollar hovered around its highest in over three months after a voting member of the Federal Reserve’s policy-setting committee expressed support for an interest rate hike in September, which outweighed softer jobs market data.
A stronger dollar tends to undermine crude oil by making it more profitable for non-U.S. investors to sell it.
The oil price hit a six-month low below $50 a barrel earlier this week.
“All the negative news we’ve had in the last few weeks and months, starting with the nuclear deal with Iran, through to economic weakness in China and the strength of the dollar have all added up and, at least in our view, this (selloff) was overdone,” said Commerzbank strategist Eugen Weinberg.
“When prices are oversold, a rebound becomes more likely.”