Oil prices reversed course Thursday, falling after first moving upward over concerns sparked by tighter US gasoline supplies. Light, sweet crude for September delivery was down by 82 cents a barrel to fetch $115.18 in electronic trading on the New York Mercantile Exchange by afternoon in Europe after being up for much of the day. The contract jumped $2.99 overnight to settle at $116.00 a barrel. Before the stockpile report, September Nymex crude touched a low of $112.87 on Wednesday, more than $34 below its July 11 high of $147.27. In London, Brent crude for September delivery was up 45 cents at noon in Europe at $113.92 a barrel. Later, in its weekly inventory report, the U.S. Energy Department's Energy Information Administration said gasoline supplies fell by 6.4 million barrels for the week ended Aug. 8, nearly three times more than the 2.2 million barrel drop expected by analysts surveyed by energy research firm Platts. The EIA said crude stockpiles fell 400,000 barrels last week against analyst expectations of a 500,000 barrel increase. Inventories of distillate fuel, which include diesel and heating oil, decreased by 1.7 million barrels; analysts had expected distillate stocks to rise by 1.9 million barrels. Mixing the picture, though, the EIA also said demand for gasoline over the four weeks ended Aug. 8 was almost 2 percent lower than a year earlier, averaging 9.4 million barrels a day. But Gavin Wendt, head of mining and resources research at Fat Prophets in Sydney, said US investors have overestimated the impact a slowdown in the US economy will have on global demand for crude. “They still think the US is the epicenter of the world economy,” Wendt said. “The US is still very important, but as far as commodity demand is concerned, the U.S. isn't the main game in town. China is the biggest consumer, and increasingly India.” Fluctuations in the value of the U.S. dollar have also played a role in setting oil prices, with the currency making a recent comeback on evidence that European economies are flagging. The 15-nation euro bought $1.4925 in European morning trading, down from its level of $1.4934 in late New York trading Wednesday. According to our calculations, the exchange rate development has contributed $12.30 per barrel to the decline in oil prices since mid-July, when the US dollar hit a low of 1.6 against the euro,” said Vienna's JBC Energy in a research note. “Since then the greenback has improved by 6.9 percent.” Oil normally rises when the dollar is weak as investors move out of the currency and look to crude as a safe haven. In other Nymex trading, heating oil futures slipped by more than 3 cents to $3.1010 a gallon (3.8 liters) while gasoline prices lost over 2 pennies to trade at 2.9076 gallon. Natural gas futures wwere down by more than 4 cents at $8.414 per 1,000 cubic feet.
