DTN Oil Update
Oil Futures Fell, Brent Traded Below $70
HOUSTON (DTN) -- Oil futures settled lower on Thursday after the International Energy Agency reported that oil supply will exceed the global demand this year, due to an escalation of the trade tariff war between the United States and other countries.
The NYMEX WTI futures contract for April delivery dropped by $1.05 to $66.63 bbl while the ICE Brent futures contract for May delivery fell by $1.06 to $69.89 bbl. April RBOB futures contract declined by $0.0165 to $2.1336 gallon and April ULSD futures dropped by $0.0483 to $2.1580 gallon.
In contrast, the U.S. Dollar Index gained 0.24% to settle at 103.8 against a basket of foreign currencies.
The trade tensions ignited by tariffs imposed by the Trump administration on imported goods from China, Canada and Mexico have affected the projections of global supply and demand fundamentals that the IEA originally estimated earlier this year.
"Growth in global oil demand is set to accelerate to just over 1 mb/d this year, from 830 kb/d in 2024, reaching 103.9 mb/d," the IEA said in its Oil Market Report released Thursday.
Asia is expected to account for almost 60% of gains, driven by a growth of Chinese petrochemical feedstocks, according to the IEA.
However, IEA anticipates that despite "the actual supply boost from the gradual unwinding of OPEC+ production cuts in April may end up being less than the nominal 138 kb/d increase, global oil supply is already on the rise."
Expectations of ample supplies are also supported by higher-than-expected U.S. crude inventory levels reported by the Energy Information Administration and the American Petroleum Institute data for last week.
The EIA reported commercial crude oil inventories in the U.S. rose by 1.4 million bbl to 435.2 million bbl in the week ending March 7, which was below the 4.247 million bbl build reported by API Tuesday, March 11 for the same reference week.
Gasoline inventories saw the steepest fall last week dropping 5.7 million bbl week-over-week to reach 241.1 million bbl, in the week ended March 7, according to EIA. This was above the 4.56 million bbl drop reported by API for the same period.
Meanwhile, distillate fuel stocks fell by 1.6 million bbl to 117.6 million bbl last week, according to EIA, which was larger than the 421,000 bbl draw API reported for the same week.
On economic data, the PPI for final demand rose 3.2% in February on an annual basis, compared to a 3.7% increase in January, the U.S. Bureau of Labor Statistics reported Thursday morning. This was below the market expectation of a 3.3% increase. On a monthly basis, the index for final demand was unchanged, according to the same report.
