Oil dips below $45 US a barrel for 1st time since March

Crude oil futures briefly fell below $45 US a barrel for the first time in five months in New York trading Wednesday, shrugging off a morning report that oil inventories fell much more than expected last week.

The fact that crude prices fell in the midst of what should have been bullish news shows the depth of the bearish mood among energy traders over the worldwide glut in crude, analysts said.

The September contract for West Texas Intermediate oil futures at the New York Mercantile Exchange was down 60 cents at $45.14 US a barrel in afternoon trading, having dipped as low as $44.91 in earlier trading.

The U.S. Energy Information Administration reported that U.S. commercial-crude inventories fell by 4.4 million barrels in the week ending July 31. A drop of less than half that had been forecast.

But the EIA also said that U.S. crude oil production also rose by 52,000 barrels a day. Refineries, meanwhile, were running at 96.1 per cent capacity last week — the highest utilization rate in 10 years. Gasoline inventories rose as demand couldn't keep up with the supply increase.

Analysts say the long-term oil story is one of oversupply amid a long-running production boom from shale fracking, combined with China's cooling economy.

"The overarching theme in the oil market ... is the status of U.S. oil supply and whether or not we'll be facing an imminent decline and the latest weekly data hasn't brought any comfort relative to those kind of expectations," BNP Paribas oil analyst Harry Tchilinguirian told Reuters.