Oil Declines Due to Lackluster Summer Season in the US

Oil prices fell on Wednesday after U.S. government data showed gasoline demand declined during the peak summer driving season and as central banks raised interest rates to combat inflation, fueling fears that the economy could slow, reducing energy demand.

However, prices pared losses during the session after TC Energy (NYSE:TRP) said the Keystone pipeline, one of Canada's major oil export arteries, was operating at low rates for a third day on Wednesday. Continued repairs at a third-party energy facility in South Dakota led to concerns that supply would tighten. Brent crude oil prices for September fell 42 cents to $106.93 a barrel by 12:44 p.m. EDT (1644 GMT). US West Texas Intermediate (WTI) crude for August fell 2 cents to $104.20 a barrel. The WTI contract expires on Wednesday. The more active September WTI contract fell 54 cents to $100.20 a barrel. U.S. gasoline stockpiles rose by 3.5 million barrels last week, government data showed, beating analysts' forecasts for a 71,000-barrel increase in a Reuters poll. [EIA/S] Gasoline supply, a gauge of demand, was about 8.5 million barrels a day, or about 7.6% lower than the same period a year ago, the data showed. "Gasoline demand is subpar to say the least," said John Kilduff, a partner at Again Capital LLC in New York. "Certainly these high gasoline prices have weakened consumer confidence." Americans were shocked in June when pump prices hit a record high of more than $5 a gallon. Meanwhile, US crude inventories fell 446,000 barrels last week, compared with analysts' expectations for a 1.4 million barrel increase. Oil prices have been extremely volatile, caught in a tug-of-war between supply fears caused by Western sanctions against Russia and concerns that the fight against inflation could weaken the global economy and reduce demand. On Friday, open interest in New York Mercantile Exchange futures fell to its lowest since September 2015 as concerns that the Federal Reserve will continue to raise US interest rates led investors to reduce their exposure to risky assets. Analysts expect tight oil supply to continue to support prices as US shale oil production rises at a modest pace.