DTN Oil

CRANBURY, N.J. (DTN) -- Nearest delivered oil futures on the New York Mercantile Exchange (NYMEX) and Brent crude on the Intercontinental Exchange (ICE) settled Wednesday's session higher but faded gains following mixed macroeconomic data and an unexpected build in commercial crude inventory in the United States.

ICE June Brent futures rallied to a $89.99 five-month high on the spot continuous chart, settling the midweek session up $0.43 at $89.35 per barrel (bbl). NYMEX May West Texas Intermediate futures edged up $0.28 with a $85.43 bbl settlement, trimming an advance to a $86.20 five-month high on a spot continuous basis.

U.S. commercial crude inventory increased 3.21 million bbl to a 451.417 million bbl, more than seven-month high, during the week ended March 29, while up 6.375 million bbl during the most recent two-week period, Energy Information Administration (EIA) reported midmorning. Crude stocks increased 20.352 million bbl, or 4.7%, during the first quarter, with most of the build occurring in mid-February amid deeper-than-expected seasonal maintenance at refineries. Another weekly falloff in U.S. crude exports, down 159,000 barrels per day (bpd) to 4.022 million bpd last week, boosted the net import rate to a 2.596-million-bpd eight-week high.

Domestic demand for distillate fuel dropped back a steep 533,000 bpd to 3.495 million bpd, crushing optimism for a rebound in demand amid an improvement in manufacturing activity in March. Distillate fuel supplied to the U.S. market is down a steep 245,000 bpd or 6.3% against the comparable year-ago period during the four weeks ended March 29 at 3.671 million bpd, according to EIA data.

Gasoline inventory was drawn down a steep 4.256 million bbl during the final week of March, pressing stocks to a 227.816 million bbl 14-week low. Gasoline supplied to the U.S. market jumped 521,000 bpd to a 9.236 million bpd five-month high in closing out the first quarter, EIA data shows.

NYMEX May RBOB futures firmed with a $ 2.7609-gallon settlement, paring an advance to a $2.7910 seven-month high on the spot continuous chart. NYMEX May ULSD futures settled up $0.0205 at $2.7324 per gallon.

More private payroll jobs were created in March than expected, according to the ADP National Employment Report released Wednesday morning which showed job growth of 184,000 compared with expectations for 150,000 new jobs. Job gains were widespread, led by leisure and hospitality, and included new employment in construction and manufacturing. Worker pay expanded last month.

"Inflation has been cooling, but our data shows pay is heating up in both goods and services," said Nela Richardson, chief economist with ADP.

The Bureau of Labor Statistics is scheduled to release the closely watched nonfarm employment report for March at 7:30 a.m. CDT Friday, with the market anticipating job growth of 200,000.

The data is in modest conflict with a slowdown in the service sector, with the Institute of Supply Management on Wednesday morning reporting a 1.2% decline in its purchasing manager's index to 51.4 last month. The sector continues to grow, although service sector employment contracted for a second month in March.

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