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| Jim Gillingham of Valero Energy Corp. talks about getting a damaged refinery back in production. (October 3) |
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NEW YORK (CNN/Money) -
Oil prices tumbled more than a dollar Wednesday after a government report showed a decline in stocks of refined fuel products but also offered signs of easing demand for gasoline.
Crude futures rose as high as $64.80 after the 10:30 a.m. report was released, but pulled back later in the session. U.S. light crude for November delivery fell $1.11 to settle at $62.79 a barrel on the New York Mercantile Exchange.
Wholesale gasoline prices slid 10 cents to $1.92 a gallon.
Distillate stocks, which include heating oil, fell by 5.6 million barrels, gasoline stocks fell by 4.3 million barrels and overall crude supplies fell by 300,000 barrels, according to the Energy Information Administration.
Analysts were looking for a drop of 1.9 million barrels of distillate stocks, 2.3 million in gas stocks and 100,000 in crude supplies, according to Reuters.
One analyst said the fall in crude prices was due to a record amount of gasoline imports and easing demand, both shown in the EIA report.
"It has taken a lot of worry out of the forward looking supply situation," said John Kilduff, an energy analyst at Fimat in New York.
The EIA said demand for gasoline and distillate fuels fell from the same time last year.
Over the last four weeks, gasoline demand has averaged nearly 8.8 million barrels per day, 2.6 percent below the same time last year.
Demand for distillate fuel has averaged 3.9 million barrels per day over the last four weeks, 3.8 percent below last year.
Gas demand eases
Kilduff said higher gasoline prices and the disruptions in daily life to those affected by Hurricane Katrina are the likely culprits behind the drop in fuel demand.
Gasoline imports meanwhile, at 1.4 million barrels per day, reached their highest level ever, the EIA said.
Europe has been sending gasoline to the U.S. in the wake of two powerful hurricanes that caused widespread damage along the Gulf Coast last month. The Gulf Coast is home to many U.S. oil refineries.
Crude prices are up about 53 percent since the start of the year, although they are off some 11 percent from record highs hit right after Hurricane Katrina.
The drop in fuel stocks, while greater than predicted, was not unexpected.
Analysts have been saying since the hurricanes that distillate stocks would fall as a result of the refinery closings.
"Sooner or later the seriousness of the situation for U.S. product supply will begin to show in the weekly U.S. data releases, though it may still be too early for that today," Barclays Capital told Reuters before the report's release.
The EIA report this week said nearly 70 percent of U.S. refining capacity is now online.
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108 Gulf oil rigs still shut, click here.
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