DTN Oil

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled mostly higher, buoyed by the Energy Information Administration's reported 10.6 million barrel (bbl) week-over-week drop in U.S. commercial crude supplies. An unexpected rise in gasoline inventories, however, fueled concerns about fuel demand, pressuring RBOB futures.

NYMEX August RBOB futures slumped 2.41 cents or 1.8% to settle the session at $1.2415 gallon, while the September contract narrowed its premium to 2.83 cents. Front-month ULSD futures advanced 1.12 cents to $1.2533 gallon and the contract for September delivery settled with a near 1.2 cents gain. NYMEX September West Texas Intermediate futures advanced 23 cents to $41.27 bbl and the international benchmark Brent crude contract jumped 53 cents to a $43.75 bbl settlement.

EIA's reported 2% crude build in the week ended July 24 contrasted sharply with analysts' forecasts for a 2.1 million bbl build. Gasoline supply, however, edged up by 653,984 bbl and distillate stockpiles rose by 503,000 bbl on the week.

Total commercial petroleum inventories decreased 6.5 million bbl last week, EIA reported. Total products supplied over the last 4-week period averaged 18.3 million barrels per day (bpd), down 13.1% from the same 4-weeks in 2019.

In broader markets, the Federal Open Market Committee ended its 2-day policy meeting by keeping the fed funds rate unchanged at between zero and 0.25%, with no new economic projections but a reinforced commitment to continue to do whatever it takes to keep the economy and financial markets running smoothly in months ahead.

"The coronavirus outbreak is causing tremendous human and economic hardship across the United States and around the world," the FOMC said in its statement. "Following sharp declines, economic activity and employment have picked up somewhat in recent months but remain well below their levels at the beginning of the year."

Last month, when the committee published its quarterly forecasts, there were hopes for a gradual recovery. However, the number of infections have since spiked, prompting new restrictions to halt the spread and worsening the outlook. Six U.S. states reported record coronavirus deaths on Tuesday, adding to concerns that the resurgence could trigger fresh business and travel restrictions, as well as school closures. The Conference Board on Tuesday said its index of consumer confidence fell to 92.6 this month from a revised 98.3 in June. Markets mostly expected a stronger reading of 96.0.

"Consumers have grown less optimistic about the short-term outlook for the economy and labor market and remain subdued about their financial prospects," said Lynn Franco, senior director of economic indicators at the board. "Such uncertainty about the short-term future does not bode well for the recovery, nor for consumer spending."

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

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