AP
Oil Prices Fall to $75.75 a Barrel
Thursday August 2, 6:59 am ET
By George Jahn, Associated Press Writer
Oil Prices Fall to $75.75 a Barrel on Higher-Than-Expected Refinery Utilization

VIENNA, Austria (AP) -- Oil prices moved lower Thursday after a roller-coaster session the previous day during which prices hit a new intraday record, later tumbling.

The downward trend appeared linked to higher-than-expected refinery utilization, which eased worries of gasoline shortfalls during the high-demand summer driving season in the United States.

Light, sweet crude for September delivery lost 78 cents to $75.75 a barrel by noon in Europe in electronic trading on the New York Mercantile Exchange.

The contract fell $1.68 to settle at $76.53 a barrel Wednesday after rising as high as $78.77 earlier in the session -- surpassing the previous intraday record of $78.40, set in July 2006.

Prices initially climbed higher again Thursday after the U.S. Energy Department's Energy Information Administration reported that oil inventories fell by 6.5 million barrels last week, far more than the 690,000 barrel-decline analysts surveyed by Dow Jones Newswires had expected on average.

As the industry rebounds from a spring and early summer in which refiners experienced an unusual number of outages, it is drawing down crude inventories that had hit nine-year highs and some investors see that as a sign crude inventories are tightening.

But gasoline futures later fell as the report also showed refiners had ramped up their operations much quicker than expected. As the slide in gasoline futures prices accelerated, oil prices followed.

"The overall decline can be mainly explained by the latest EIA data showing an increase in refinery throughput levels in the U.S.," said Vienna's PVM Oil Associates.

Jason Schenker of Wachovia Corp., in Charlotte, North Carolina, said "product prices pulling down the price of crude ... as we move into the second half of the year," was a likely scenario.

Refinery utilization jumped by 1.9 percentage points to 93.6 percent of capacity, more than double an expected increase of 0.7 percentage points.

Gasoline inventories rose by 600,000 barrels, the EIA said. Analysts had expected an increase of 1.1 million barrels. Inventories of distillates, which include heating oil and diesel fuel, rose by 2.8 million barrels, twice the predicted increase of 1.4 million barrels.

Analysts have placed much of the blame for the recent run-up in oil prices on speculators and technical buying by large investment funds.

September Brent crude slipped 66 cents to $74.69 a barrel on the ICE futures exchange in London.

Nymex gasoline and heating oil futures lost more than 2 cents to sell for $2.0065 and $2.0486 a gallon. Natural gas rose 2.8 cents to $6.380 per 1,000 cubic feet.