World oil prices fell sharply Wednesday after a sharp build in U.S. gasoline stocks stoked concerns that American motorists are cutting down on their mileage this summer amid a slowdown in the U.S. economy.
IN WEDNESDAY trading on the New York Mercantile Exchange, U.S. light sweet crude dropped $1.43 to $25.55.
Weekly U.S. stock figures from the American Petroleum Institute (API) released late Tuesday helped to knocked down unleaded gasoline futures, which skidded 5.79 cents to 72 cents a gallon.
The API reported a 3.3 million barrel increase in U.S. gasoline tanks to 222.9 million barrels in the week to June 22, the tenth week in a row that stocks have risen.
The sharp gain — industry sources had earlier forecast a build of only 1.15 million barrels — came during vacation season in the United States when gasoline demand would normally be reaching a seasonal peak.
Analysts said consumption was being held down by high pump prices earlier this year and a slowdown in the U.S. economy. Previous concerns of a potential summer supply crunch had been eradicated, they said.
“The lingering concern over stock positions has been completely blown away by the (tenth) consecutive week of stock building on gasoline,” said John Russel, managing director of consultants PEL Pacific in Bangkok.
“There’s no doubt about it — demand is being crimped,” said Tim Evans, senior analyst at IFR-Pegasus.
The gasoline build in the week ended June 22 came despite traditionally strong driving demand in early summer, and despite a decline in refinery utilization of 0.8 percent to 94.2 percent, the report showed.
The API showed crude stocks rising by a modest 565,000 barrels to 313.5 million barrels. U.S. crude inventories of 313.5 million barrels now are 20 million barrels, or seven percent, higher than a year ago.
Reuters contributed to this story.