Crude Futures Gain on Supportive EIA

WASHINGTON (DTN) -- With exception of the front-month ULSD contract, crude and gasoline futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled modestly higher Thursday, following slightly supportive inventory data detailing a smaller-than-expected build in U.S. crude oil stocks and another weekly drawdown in refined product supply.

Thursday's session brought in some heavy selling across equity markets, with declines once again attributed to lingering concerns surrounding the impact of the coronavirus epidemic in Asia. Combined with a strengthening U.S. dollar that rallied to a fresh more-than 3-1/2-year high 99.815 at midsession, heavy losses among risk asset markets began weighing on the oil complex in afternoon trade, knocking crude contracts off earlier highs.

In market-on-close trade, NYMEX March West Texas Intermediate futures rolled off the board at $53.78 barrel (bbl), with the April WTI contract narrowing its premium to $0.10 for a $53.88 bbl settlement. ICE April Brent contract edged up $0.19 to finish at $59.31 bbl.

NYMEX March RBOB futures moved up 0.64 cents to a six-week spot high $1.6697 settlement, drawing support from the third weekly decline in domestic gasoline stocks through the period ended Feb. 14. Energy Information Administration reported gasoline supply dropped 2 million bbl last week as demand for motor fuels extended higher for the second straight week.

Front-month ULSD futures edged down 0.92 cents to $1.6976 gallon on the session even as EIA data showed distillate fuel inventories fell for a fifth straight week, though the draw was smaller than in recent weeks. Stocks fell 634,992 bbl to 140.6 million bbl, a six-week low while 1.4% higher than the corresponding week in 2019.

Agency data showed crude stocks increased by 415,008 bbl last week, nearly four times less than expected, and well below a 4.16 million bbl build reported by American Petroleum Institute. The small build was realized as domestic refiners ramped up crude throughputs, up 190,000 bpd from the previous week to 16.2 million bpd, nearly 3.2% above year prior. Exports increased 594,000 bpd to 3.567 million bpd last week, despite a strengthening U.S. dollar that inflates the price of U.S. crude for foreign traders.

U.S. crude production remained near record high at 13 million barrels per day (bpd) during the reviewed week.

The oil complex was also lent support from ongoing concerns over available crude supplies on the global market after the U.S. Treasury slapped sanctions on the trading arm of Russian's oil giant Rosneft for their dealings with Venezuela's oil industry that has been under sanctions regime for over a year. According to Reuters, Venezuela's President Nicolas Maduro has declared an emergency for the country's oil industry, calling for measures to ensure Venezuela's energy security. It is yet unclear what these measures would be.

At the same time, Libya's crude production halted to near zero amid a prolonged blockade at its export terminals. Since early 2020, a conflict in Libya has led to a blockade of its key export terminals and oilfields Al-Sharara and El-Feel in the southern provinces, slashing national crude output by over 1 million bpd. According to independent estimates, Libya's crude production averaged just 150,000 to 200,000 bpd in February after averaging 1.097 million bpd in 2019.

Liubov Georges can be reached at liubov.georges@dtn.com

(BAS)

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