Oil drops after surge in U.S. gasoline inventories

Oil prices dropped after the official figures showed a big increase in U.S. gasoline stocks on Thursday. This increased the concerns about demand for crude weakening in the world’s biggest consumer of the resource at a time when supplies around the world are rising.

Brent crude eased 47 cents, or 0.7%, to $62.70 a barrel. U.S. oil settled 17 cents, or 0.28%, lower at $59.60 per barrel. The crude stocks in the United States dropped more than the forecast by analysts, gasoline inventories jumped sharply, also against expectations.

Oil inventories dropped by 3.5 million barrels last week to nearly 502 million barrels, while gasoline stocks increased by 4 million barrels, against expectations of a decline, to just over 230 million barrels, as refiners ramped up production before the summer driving season. Bob Yawger, director of energy futures at Mizuho Securities said that refiners may pull back on the run rate a bit to keep the gasoline storage from challenging the record. The traders said that at the same time supply is rising across the world with Russian output increasing from average March levels in the first few days of April. Higher economic growth would boost demand for oil and its products, helping to reduce stockpiles.

Iran may see some sanctions lifted and add to global supplies, with the U.S. and other powers holding talks on reviving a nuclear deal that almost stopped Iranian oil from coming to market. The International Monetary Fund passes a statement that massive public spending deployed to combat the COVID-19 pandemic may increase global growth to 6% this year, a rate not achieved since the 1970s.