DTN Oil Update
Oil Futures Fell on High Crude Stocks, Tariff Fears
HOUSTON (DTN) -- Crude oil futures fell nearly $2 Wednesday after the Energy Information Administration and the American Petroleum Institute reported a higher-than-expected build in crude inventories last week.
The bearish sentiment in the oil futures market was fueled also by fears of the potential impact of additional trade tariffs imposed by the United States on imported goods from China, Mexico and Canada this week on the U.S. economy.
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The NYMEX WTI futures contracts for April delivery plummeted by $1.91 to $66.35 per barrel (bbl) while the front-month ICE Brentâ?¯dropped by $1.70 to $69.34 bbl. The RBOB futures contract for April delivery dipped $0.0605 to $2.1334 gallon and the April ULSD futures contract rose by $0.0469 to $2.2403 gallon.
The U.S. Dollar index decreased by 1.47% to 104.24 against a basket of foreign currencies, reaching its lowest level since November.
Wednesday morning, the EIA reported commercial crude oil inventories in the U.S. rose by 3.6 million bbl to 433.8 million bbl last week. This was larger than a 1.455 million bbl build reported by API on Tuesday, March 4, for the same reference week. API also noted supplies at the Cushing, Oklahoma, tank farm, the delivery point for NYMEX WTI futures, rose 1.630 million bbl last week.
According to EIA, gasoline stocks fell by 1.4 million bbl week-over-week reaching 246.8 million bbl, in the week ended Feb. 28. This was below 1.249 million bbl drop reported by API for the same period.
Distillate fuel stocks fell 1.3 million bbl to 119.2 million bbl last week, according to EIA, the figure was below the 1.136 million bbl build API reported for the same week.
Meanwhile, refinery utilization dropped to 85.95% from 86.5% reported the prior week.
A crude inventory build brings additional pressure to the oil futures market, as ample supplies of global crude are anticipated following OPEC's decision this week to gradually increase 2.2 million barrels per day (bpd) its global output starting April 1.
Meanwhile, volatility in the oil futures market is also driven by the trade tariff war initiated by the Trump administration.
Tuesday, the United States imposed a 25% tax on imported goods from Canada and Mexico, in addition to the 25% tariff on aluminum and steel imports from both countries levied in February. The Trump administration also imposed an extra 10% tariff on imported goods from China. China and Canada responded with immediate retaliatory tariffs of 15% and 25%, respectively, while Mexico is expected to announce a retaliatory tax on Sunday.
