Oil prices extended gains in Asian trade on Thursday, after a larger than expected draw in U.S. crude and gasoline stocks strengthened the outlook for oil demand. But gains were capped by a stronger dollar and despite the drop in oil stocks some commentators warn of a global supply glut, with OPEC members producing 3 million barrels per day more than demand in the second quarter.
U.S. crude stockpiles fell by 4.2 million barrels in the week to July 24, more than twenty times analysts’ expectations of a decrease of 184,000 barrels, Energy Information Administration (EIA) data showed. Gasoline stocks dropped by 363,000 barrels against analysts’ forecasts of a 512,000-barrel gain with U.S. gasoline demand up 6.2 percent from a year ago.
The large draw down in stocks could be short-lived, said Tony Nunan, oil risk manager at Tokyo’s Mitsubishi Corporation. “The EIA data shows demand is being stimulated by lower oil prices. It could be a flash in the pan. We have passed peak summer demand. It could be temporary,” he said. The drawdown is “providing temporary support that should wane – a last hurrah for summer,” Nunan added.