Crude prices dip 3.7 percent as US gasoline stocks rise

By Ovunc Kutlu

NEW YORK (AA) - Crude oil prices fell nearly 4 percent Wednesday after government data showed gasoline inventories and oil production increased.

American benchmark West Texas Intermediate fell to as low as $44.55 just past noon (1600GMT), while international benchmark Brent crude declined to $46.79 -- each losing more than 3.7 percent.

Gasoline stocks rose 2.1 million barrels, or 0.9 percent, to 242.4 million barrels, for the week ending June 9, Energy Information Administration (EIA) data showed. Analysts expected a decline of 0.4 million barrels.

American refineries bought crude last week, because commercial stocks fell by 1.7 million barrels to 511.5 million, but it appears not much gasoline was sold because domestic demand remained low.

"Gasoline consumption is now about 5 percent lower than in the same week last year," Thomas Pugh, a commodities economist at London-based Capital Economics, said in a note. "This represents a very poor start to the U.S. driving season.”

The so-called U.S. driving season starts at the beginning of summer when gasoline demand peaks to its highest level of the year.

Demand for gasoline in the U.S. remained low despite decreasing gasoline prices.

The average price of regular gasoline is $2.34 per gallon nationwide, according to the American Automobile Association. That is $0.05 per gallon cheaper compared to a year ago.

The rise in domestic oil production also contributed to the decline in oil prices.

U.S. crude oil output rose 12,000 barrels per day (bpd) to 9.33 million bpd, for the week ending June 9, the EIA said.

Crude production has now increased 15 times in the past 17 weeks.

The global oil market will now focus on the weekly change in the oil rig count data to be released Friday.

The number of oil rigs in the U.S. has increased for 21 consecutive weeks, according to oil services company Baker Hughes.