Looming gasoline glut pulls down crude oil prices

By Henning Gloystein

SINGAPORE (Reuters) - Crude oil prices fell in early Asian trading on Tuesday on signs of weakening gasoline demand, long a pillar of support for struggling fuel markets, in both North America and Asia.

Front month U.S. West Texas Intermediate (WTI) crude futures were trading at $35.39 per barrel at 0015 GMT, down 30 cents from their last settlement.

International Brent futures were down 23 cents at $37.46 a barrel.

The declines extended falls from the previous two sessions as investors doubted that producers will be able to rein in global overproduction that has seen crude prices tumble by as much as 70 percent since mid-2014.

 

Tuesday's declines came after U.S. gasoline demand fell for the first time in 14 months while oversupply and slowing economic growth in Asia forced some traders to store unwanted gasoline aboard tankers as onshore storage facilities in Singapore and Malaysia are filled to the rims.

Strong gasoline demand has been one of the strongest pillars of demand in the fuel complex, largely credited for preventing crude prices from tumbling even further than they did.

With an emerging gasoline glut potentially adding to a global overhang in crude production that sees over 1 million barrels produced in excess of demand every day, analysts say that prices could fall lower again soon.

"Global oil balances will witness sizeable implied inventory builds in H1'16, suggesting that the price of oil can easily revisit the lows seen earlier this year," French bank BNP Paribas said in a note to clients.

(Reporting by Henning Gloystein; Editing by Richard Pullin)