Inventories of US crude fell by 2.2m barrels in the week to July 1, according to the latest data from the Energy Information Administration. That was less than forecasts for a drawdown of 2.5m barrels and also far smaller than a 6.7m barrel drop reported by an industry group the previous day.

US crude oil, which rose in early trading, reversed to drop 5.4 per cent to a low of $44.87 a barrel — a level last seen in May.

Brent crude oil, the international benchmark, dropped 5.4 per cent to $46.15 a barrel.

Weak US gasoline prices have pulled crude off its recent highs, as stockpiles of the motor fuel remain stubbornly high during the traditional summer driving season.

Traders had bid up gasoline at the start of the year on the expectation that strong US demand would prompt refiners to produce more of the fuel, but in the last week of June inventories declined by just 122,000 barrels — practically a rounding error in a near 9.8m barrel-a-day market.

Citigroup pointed out that stocks of reformulated gasoline blendstock — the basis for benchmark gasoline futures — rose by 2.2m barrels at their delivery point on the US east coast. Nymex August gasoline settled down 4.9 per cent to $1.3631 a gallon, bringing this week’s losses to 10 per cent.

“We remain cautiously constructive on oil prices through the balance of the year, but the market will remain choppy over the coming months in our view,” said Helima Croft at RBC Capital Markets.

“Particularly in the US, the oversupply of gasoline poses a threat to the pace of the upward trajectory for crude prices in the near term.”

Oil has rallied from a 13-year low below $30 a barrel in January, but gains have stalled since breaching $50 a barrel last month.

The UK’s vote to leave the EU has been one factor roiling the market, with speculative traders closing positions amid greater financial uncertainty.

Some forecasters are also concerned about the impact on European growth and oil demand in the region, even if they see prices rising long term. The near halving in prices since 2014 has hit investment and is slowing supplies from outside the Opec cartel.

Energy Aspects, a London-based consultancy, on Thursday lowered its forecasts for Brent crude oil in the second half of the year by $3 a barrel as a result of the Brexit vote, predicting it would now average $52 a barrel and $62 a barrel in the third and fourth quarters respectively.

“Europe is hardly out of the woods and concerns around the health of the banks in peripheral Europe are on the rise,” analysts at Energy Aspects said.

“The months of negotiations will create ample uncertainty to keep investment under pressure, even without a full-blown recession.”

A deal to unify Libya’s competing National Oil Companies has also weighed on crude as a conflict between them had contributed to keeping 1m barrels a day off the Libyan market.

Royal Dutch Shell also said on Thursday it was lifting a force majeure on exports of Bonny Light crude oil, in the latest indication that Nigeria’s oil industry is showing greater resilience to attacks from militant groups in the Niger Delta region.

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