Crude oil fell almost 1 per cent on Tuesday, down for a fifth day, under pressure from weakness in gasoline which fell to a 6-½ month low as the US driving season draws to a close without triggering a stockpile drop.
US crude for October delivery fell 70 cents to $US72.40 a barrel in Asian trade, the lowest price since July 7. ICE Brent for October fell 57 cents to $US73.05.
"The basic issue is just record-high inventory levels at the end of the gasoline season, when demand is going to be dropping," said Tony Nunan, a risk manager with Tokyo-based Mitsubishi Corp.
"US gasoline inventories have gone sideways during the peak driving season, when we should get a draw. We are pretty close to $US72, which is support, but if we break through that we'll go to the $US60s."
The price of RBOB gasoline futures for September delivery slumped to a fresh trough of 186.65 cents a gallon on Tuesday, the lowest intraday price since early February.
Crude inventories in the US were forecast to have climbed 800,000 barrels last week, a Reuters survey showed, while stockpiles of distillates including heating oil and diesel may have advanced 1 million barrels, in what would be their 13th consecutive weekly gain.
US gasoline inventories probably fell 200,000 barrels in the week ended Aug. 20, the survey showed ahead of an industry weekly inventory report on Tuesday and government statistics on Wednesday, compared with a 3.3-million-barrel drop in the same week a year ago.
Gasoline stockpiles have increased during the northern hemisphere summer in 2009 and 2010, U.S. government data show, counter to normal seasonal patterns. And this year's gain has left supplies at the highest level for August since at least 2004.
The US driving season, when holidaymakers take to the roads, sending demand for motor fuel to its annual peak, will finish with the Memorial Day long weekend in early September.
In the week to August 13, total US commercial crude and product inventories rose to 1.13 billion barrels, from 1.125 billion barrels the week before, eclipsing the previous weekly record high of 1.127 billion barrels set in 1990, when the government began issuing weekly inventory figures.
The American Petroleum Institute will publish industry inventory figures for the week ended August 20 on Tuesday, followed by an Energy Information Administration stockpiles and demand report on Wednesday.
Oil markets will also focus on US housing indicators later on Tuesday. Home sales in July, usually one of the busiest months for housing activity, should paint a poor picture as the sector continues to struggle in the aftermath of the expiry of popular home buyer tax credits.
Asian stocks fell on Tuesday, with Japan's Nikkei index dipping below a key support level as investors fretted about an anaemic global recovery, while the euro hit a six-week low against the dollar.
"A recovery in the stock market and in oil prices would require an improvement in some kind of leading indicator, like employment," Nunan said.
On Monday, Wall Street gave back early gains and fell as a slew of corporate takeover activity, usually a sign of investor optimism, was outweighed by concerns about the global economy.
The US dollar reversed early gains against the euro on Tuesday, but ticked higher against a currency basket.
Tropical Storm Danielle in the central Atlantic Ocean strengthened into the season's second hurricane Monday afternoon as it continued to move west-northwest toward Bermuda and not toward key oil and gas producing areas in the Gulf of Mexico.