LONDON: Oil prices settled down more than $5 on Wednesday as fuel demand destruction and a bleaker macroeconomic picture took centre stage in the day’s trade.

Brent crude oil futures settled down 5.11, or 5.6 per cent, to $85.81 a barrel while US West Texas Intermediate crude (WTI) fell $5.01, or 5.6pc, to $84.22.

At their session lows, both benchmarks were down by more than $5, and heating oil and gasoline futures also fell by more than 5%. Crude oil prices have fallen by about $10 since last week’s settlement.

Finished motor gasoline supplied, a proxy for demand, fell last week to about 8 million bpd, its lowest since the start of this year, the US Energy Infor­mation Adminis­tration (EIA) reported Wednesday.

Some of that demand destruction could be due to torrential rains which brought flooding to New York last Friday and post-tropical storm Ophelia, which doused the Northeast with torrential downp­ours in late Septe­mber, said Bob Yawger, director of energy futures at Mizuho.

Seasonally, U.S. gasoline consumption is at the lowest level in 22 years, according to commodity analysts at JP Morgan.

A 30pc spike in fuel prices in the third quarter of this year depressed demand, resulting in a counter seasonal plunge of 223,000 barrels per day, the analysts wrote in a Wednesday note. Gasoline stocks rose by 6.5 million barrels, far exceeding expectations of a rise of 200,000 barrels.

Published in Dawn, October 5th, 2023