Fueling Strategy: Please fill as needed today/tonight, Thursday AM wholesale prices will go up less than 1/2 cent – Be Safe Tonight!

NYMEX Crude $ 42.92 DN $1.0000
NY Harbor ULSD $1.2950 DN $0.0310
NYMEX Gasoline $1.3214 DN $0.0238

NEWS
Oil futures fell to their lowest levels in more than three months Wednesday after U.S. government data revealed the first weekly climb in domestic-crude inventories in 10 weeks, along with a surprise increase in gasoline stockpiles and a rise in total crude production.

September West Texas Intermediate crude fell 91 cents, or 2.1%, to trade at $42.01 a barrel on the New York Mercantile Exchange. A settlement around this level would be the weakest since April 18 for a most-active contract, FactSet data show. Prices traded around $43.13 before the supply data. September Brent crude London’s ICE Futures exchange dropped $1.10, or 2.5%, to $43.77 a barrel. “Look out below,” said John Macaluso, an analyst at Tyche Capital Advisors, referring to prices.

The U.S. Energy Information Administration early Wednesday reported that domestic crude supplies rose by 1.7 million barrels for the week ended July 22. That was contrary to the 2.6 million-barrel decline expected by analysts polled by S&P Global Platts. The American Petroleum Institute late Tuesday reported a fall of 827,000 barrels. “With a surprising build in U.S. crude oil inventories today along with builds in Cushing, Okla., we expect prices to trade below some key technical numbers,” said Macaluso. The EIA showed a rise of 1.1 million barrels for stocks of crude oil at the storage hub. Meanwhile, “continued strength in the U.S dollar and an increase in U.S production could spell another leg lower for oil prices,” he said.

Total domestic crude production rose by 21,000 barrels to 8.515 million barrels a day as output in Alaska grew, though it fell by 12,000 barrels to 8.033 million barrels a day in the lower 48 states. Gasoline supplies also climbed by 500,000 barrels, while distillate stockpiles fell by 800,000 barrels last week, according to the EIA. The S&P Global Platts analyst survey showed expectations for a drawdown of 700,000 barrels for gasoline stocks and a rise of 400,000 barrels for distillates, which include heating oil.

Compared with February, when oil hit around $26, prices have risen significantly in the past five months, thanks to several supply disruptions such as workers strikes in Kuwait, wildfires in Canada’s oil sand production hub, and militant attacks in Nigeria. But some of these factors have ended or are coming to a close, raising concerns over a growing supply of crude and oil products. In the U.S., despite the annual driving season, gasoline stocks there are at 241.5 million barrels—”well above the upper limit of the average range,” the EIA said.

China, the world’s second-biggest consumer of oil, has also ramped up its exports of distillates in the past few months in a bid to dump its unwanted barrels to the regional market. “What we are seeing is the effects of cheap crude coming to fruition in the products market,” said Vyanne Lai, an energy analyst at National Australia Bank. The worry is that the swelling glut of gasoline will prompt refiners to buy less crude oil going forward, causing the global glut of crude to linger longer and put prices under pressure.

A statement from the U.S. Federal Reserve due shortly before oil futures settle Wednesday may also garner attention from oil traders. It could offer the central bank’s views on the economy as well as clues on the Fed’s next move on interest rates.