DTN Oil

WASHINGTON (DTN) -- Nearest delivery oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange finished the session mostly higher, with the front-month RBOB contract posting the highest settle in two weeks after federal data showed gasoline demand continued higher last week despite localized virus outbreaks across Sun Belt States, reinforcing the view that fuel consumption could remain resilient to the pandemic's second surge.

U.S. gasoline consumption jumped to a 15-week high 8.8 million barrels per day (bpd) in the week ended July 3 with inventories falling to their lowest since late March at 251.7 million barrels (bbl), according to Energy Information Administration data. The larger-than-expected draw of 4.8 million bpd was nearly four times what most analysts forecast, lifting RBOB August futures to a $1.2909 per gallon settlement. There has been much speculation in recent weeks that coronavirus outbreaks in large U.S. gasoline demand centers, like Texas and Florida, would dampen summer driving demand with consumers seen pulling back on spending. This week's EIA inventory data has yet to confirm this trend. Private traffic data, however, showed driving activity in Southwestern states fell to its lowest in 4 weeks during the July 4th holiday weekend.

The exception to oil complex gains were ULSD futures with the August contract modestly lower at settlement at $1.2344 per gallon after inventory data showed a much larger-than-expected build in distillate stocks and sizable drop in demand. EIA reported distillate stocks, including heating oil and diesel fuel, spiked 3.1 million barrels to 177.3 million barrels, about 28% above the 5-year average. Implied demand for distillates declined 759,000 bpd or 20.1% in the week ended July 3 to 3.019 million bpd.

While the EIA data was somewhat bearish for WTI futures, the front-month contract managed to shake off the larger-than-expected build in U.S. commercial crude oil stocks as a result of higher imports and stalled export rate. Data showed commercial crude stockpiles spiked 5.7 million bbl to 539.2 million bbl in the week ended July 3, about 18% above the 5-year average.

The refining activity exceeded expectations with EIA reporting a 2% weekly advance versus 0.3% forecast by analysts. Refinery crude throughputs increased 314,000 bpd from the previous week to 8.766 million bpd. Total products supplied over the last 4-week period averaged 17.8 million bpd, down by 15.1% from the same period last year.

U.S. benchmark, WTI spot month futures settled at a 4-month high $40.90 bbl and the international benchmark Brent finished Wednesday session with a $0.21 gain at $43.29 bbl.

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

(c) Copyright 2020 DTN, LLC. All rights reserved.