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Oil near $89 after mixed US energy supply report

Oil near $89 after mixed US energy supply report

Oil prices hovered near $89 a barrel Thursday after a U.S. energy report showed mixed signals about demand and markets awaited President Barack Obama's speech outlining new policies to boost job creation in the U.S. economy.
By early afternoon in Europe, benchmark oil for October delivery was down 7 cents to $89.27 in electronic trading on the New York Mercantile Exchange. Crude jumped $3.32, or 3.9 percent, to settle at $89.34 on Wednesday.
In London, Brent crude for October delivery lost 35 cents to $115.45 on the ICE Futures exchange.
The American Petroleum Institute said late Wednesday that crude inventories fell 3.0 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted a drop of 1.7 million barrels.
Inventories of gasoline decreased 871,000 barrels last week while distillates, such as heating oil, increased 4.0 million barrels, the API said.
The Energy Department's Energy Information Administration reports its weekly supply data later Thursday.
"The demand picture is a mixed bag in the U.S. with unemployment, stagnant income growth and efficiency weighing on gasoline consumption," J.P. Morgan said in a report. "We see gasoline demand shrinking this year while distillate use continues to strengthen moderately."
President Obama's speech to Congress later Thursday is set to focus on proposals to generate more jobs and increase economic activity, which could create additional demand for oil and support prices.
Some analysts think that slowing global economic growth will hurt crude demand and send prices lower.
"The oil market is still an appealing asset class in a near zero interest rate environment," energy consultant Ritterbusch and Associates said in a report. "But we still have difficulty constructing a bullish fundamental case for a market that's likely to be dogged by weak demand."
Prices were supported by storms developing in the Gulf of Mexico, a key U.S. source of crude.
"A further tropical storm, Nate, has developed, which could lead to longer interruptions to production and a fall in U.S. stocks," said analysts at Commerzbank in Frankfurt. "Up to (Wednesday), 37 percent of U.S. oil production in the Gulf of Mexico was still shut in following tropical storm Lee, which is a production outage of a good 500 thousand barrels a day."
In other Nymex trading for October contracts, heating oil fell 1.84 cents to $3.0572 per gallon and gasoline futures dropped 1.67 cents to $2.8913 per gallon. Natural gas for October delivery rose 2 cents to $3.96 per 1,000 cubic feet.
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Alex Kennedy in Singapore contributed to this report.


Updated : 2021-06-16 04:18 GMT+08:00