Oil Lower in Wednesday Trade
NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures fell to better than one-week lows Wednesday morning, stretching losses for the third straight day after the American Petroleum Institute late Tuesday showed stock builds for U.S. crude oil and gasoline.
The API data detailed a 3.2 million bbl crude stock increase for the week-ended Jan. 26, more than an expected stock build of 1.75 million bbl, and a 2.7 million bbl stock build for gasoline versus an expected draw of 500,000 bbl.
While the tone has been set by crude statistics, the API data for distillates was bullish however, showing a 4.1 million bbl stock drawdown that surpassed estimates calling for a 1.75 million bbl stock draw.
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The Energy Information Administration is scheduled to release its weekly oil report at 10:30 AM ET. If the federal agency confirms the API's crude data, it would be the first increase in domestic supply in 11 weeks.
Some analysts also expect the latest EIA report to show a further increase in crude oil production. This expectation is based on the fact that Baker Hughes on Friday reported an increase of 12 oil rigs to a 759 five-month high for the week-ended Jan. 26.
A week ago, EIA showed U.S. crude production increased during the week-ended Jan. 19 by 128,000 bpd to 9.878 million bpd, the highest domestic production rate in nearly five decades.
In early trade, NYMEX March West Texas Intermediate crude traded down 18cts at $64.32 after posting a better than one-week low of $63.67 bbl. March Brent crude on the Intercontinental Exchange traded down 25cts at $68.77 bbl after posting a better than one-week low of $68.33 bbl.
With the March Brent contract expiring later this afternoon, the April Brent contract was down 19cts at $68.33 bbl, trading at a slightly better than $4.00 bbl premium to the spot-month WTI contract.
Technically, the market is looking to see if Brent and WTI contracts will signal a break from their uptrends, a move that could accelerate the selloff. Brent briefly broke below short-term support at $68.50 on Tuesday and again overnight.
NYMEX February ULSD futures eased 0.64cts to $2.0653 gallon, near a better than one-week low of $2.06, while the March contract dipped 0.51cts to $2.0620 gallon. February RBOB futures tumbled 2.55cts to a $1.8699 gallon better than one-week low, with March contract down 1.62cts to $1.8545 gallon.
The February RBOB and ULSD contracts are set to expire at the close of trade.
George Orwel can be reached at george.orwel@dtn.com
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