DTN Oil

CRANBURY, N.J. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange moved mixed late morning in response to weekly statistics released by the Energy Information Administration showing draws from gasoline and distillate fuel inventories and a smaller build in U.S. commercial supply against industry data released late Tuesday, although price support was undermined by a modest decline in gasoline demand.

Heading to the noon hour in New York, NYMEX July West Texas Intermediate futures were down $0.35 near $38.05 per barrel (bbl), trading at a $2.75 discount to the August Brent contract on the Intercontinental Exchange. July ULSD futures were flat near Tuesday's $1.1822 gallon three-month high settlement on the spot continuous chart, with July RBOB futures up $0.0055 near $1.2125 gallon.

A 1.2 million bbl build in commercial crude supplies reported by EIA for the week ended June 12 was less than a 3.875 million bbl increase reported late Tuesday afternoon by the American Petroleum Institute, lending support for WTI futures, with the smaller draw on a sharp 600,000 barrels per day (bpd) drop in domestic output and a 116,000 bpd boost in crude inputs at U.S. refineries. EIA also showed another 1.7 million bbl of crude was deposited in the Strategic Petroleum Reserve last week.

Gasoline supplied to the U.S. market eased 31,000 bpd to 7.87 million bpd after three weeks of gains, with the slowdown in implied demand bearish considering state reopenings following lockdowns to slow the spread of COVID-19, suggesting high unemployment is having a material effect on driving activity. Gasoline demand is expected to tick higher during the summer season, with summer beginning Saturday, with growth in gasoline demand seen as a critical dynamic in the recovery for the U.S. oil market.

Overall oil products demand in the United States fell 283,000 bpd during the profiled week from a 10-week high, with most of the decline due to a 190,000 bpd slid in implied propane demand. Distillate fuel supplied to the U.S. market improved for a second straight week after falling to a 25-year low at 2.718 million bpd, up 252,000 bpd at 3.555 million bpd.

Distillate fuel inventory was drawn down for the first time in 10 weeks during the week-ended June 12, down 1.4 million bbl to 174.5 million bbl on a combination of better demand and lower production. EIA reported distillate output down 264,000 bpd or 5.5% to 4.498 million bpd for the week, the lowest refinery yield since March 2018.

Brian L. Milne can be reached at brian.milne@dtn.com

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