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Wednesday, August 17, 2022

Oil down, heads for sixth weekly loss on gasoline glut

By Barani Krishnan

NEW YORK (Reuters) – Crude oil dipped on Friday, plumbing multi-month lows and headed for a sixth straight week of losses, pressured by tumbling gasoline prices as the approaching end of the U.S. summer driving season suggested a growing surplus in fuel supply.

The dollar’s rise to a 3-1/2 month high against a basket of currencies after strong U.S. jobs growth in July also weighed on oil and other commodities denominated in the greenback.

Traders and investors were awaiting the latest weekly reading on the U.S. oil rig count from industry firm Baker Hughes at 1:00 p.m. EDT (1700 GMT) for signs on whether crude production could rise from higher drilling activity. Drillers have added 26 oil rigs in the past two weeks.

Brent, the global oil benchmark, has traded at six-month lows and U.S. crude at a 4-1/2-month trough since Wednesday after government data showed U.S. gasoline stocks exceeding market estimates last week by about 300,000 barrels.

Brent was down 55 cents, or 1.1 percent, at $ 48.97 a barrel by 12:10 p.m. EDT (1610 GMT), after hitting a Jan. 30 low of $ 48.55.

U.S crude slipped 40 cents, or almost 1 percent, to $ 44.26 a barrel. It hit a March 20 bottom of $ 43.94 earlier.

For the week, Brent was down 6 percent. It has fallen nearly 23 percent over the past six weeks.

U.S. crude also slid 6 percent for the week, while losing about 26 percent in the last six weeks.

Analysts said crude futures could be pressured in coming months by seasonal refinery maintenance and stock builds in key oil products such as distillates, which include diesel.

Gasoline sank by more than 1.4 percent to 5-1/2 month lows on Friday, and ultra-low-sulfur diesel traded not far from six-year lows set earlier in the week.

“The summer driving season is fading and we could see a quick ramp up in gasoline stocks,” said Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland.

“We’ve had record refining heading out of the driving season that should translate into higher stocks of refined products in fall and winter.”

(Additional reporting by Libby George in London and Aaron Sheldrick in Tokyo; Editing by Susan Thomas and David Gregorio)

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