US light, sweet crude for September delivery fell 61 cents to $71.28 a barrel, its lowest since June 26. London Brent was down 62 cents to $72.21 a barrel.
US crude prices have shed more than 7 percent after falling for six of the last eight sessions as a ceasefire took hold in the Middle East and BP decided to shut in only half of its 400,000 barrel-per-day (bpd) Prudhoe Bay oilfield.
Some dealers had feared the partial closure of the biggest oilfield in the United States might trigger a surprisingly large drawdown in this week’s crude inventories, but data on Wednesday showed a decline of 1.6 million barrels, in line with forecasts.
Crude stocks have fallen from the eight-year high reached earlier this year, but still remain higher than almost any time since 1999, giving refiners a sizeable supply buffer to guard against any unexpected disruptions.
Gasoline inventories dropped by a deeper-than-expected 2.3 million barrels, but demand eased from the previous week as the summer driving season, which ends in early September, began to wind down.
“It is this pace of demand deceleration, as well as the plentiful supplies of heating oil, that may set a more modest bearish tone to the market in the weeks after August,” said First Energy Capital analyst Martin King.
“WTI crude oil prices treading water more in the range of the very low $70s to very high $60s may be something that materialises, barring any hurricane-induced price spikes.”
Distillate stocks rose 800,000 barrels and heating oil supplies stand higher than a year ago, the data showed.
Supplies of natural gas, also used for winter heating, stand at historically high levels for the season and are expected to have risen over the past week, a Reuters poll showed. Gas storage data is due for release later on Thursday.
In the Middle East, Lebanese troops rolled into the country’s south on Thursday to join UN peacekeepers in taking control of Hizbollah strongholds as a ceasefire ending the month-long war extended into a fourth day.
But regional security concerns remain a factor for the market, as Iran—OPEC’s second-largest producer—faces a self-imposed deadline of Aug. 22 for responding to a package of incentives meant to end its uranium enrichment.
Foreign Minister Manouchehr Mottaki said on Wednesday that Tehran was ready to discuss the issue of suspending enrichment but would explain that it believes any halt to be “illogical”.
The spectre of an Atlantic storm season—which has yet to produce a hurricane—also supported prices. Devastating Hurricane Katrina hit the US Gulf Coast at the end of August last year, and some oil and gas fields have yet to recover.