Oil Ends the Day Mixed

CRANBURY, N.J. (DTN) -- New York Mercantile Exchange (NYMX) oil futures nearest to delivery and Brent crude on the Intercontinental Exchange settled mixed, either reversing overnight losses or paring the decline after testing initial support during a relatively calm trading session following a volatile second quarter to date. The consolidation trade followed last week's sharp advance, coming ahead of data on the weekly change in U.S. oil supply that will likely show a draw in crude and modest builds in oil products.

U.S. commercial crude supply was likely drawn down during the week-ended April 13, as refiners gradually return units from seasonal maintenance and process more of the raw material. The Energy Information Administration (EIA) reported the U.S. refinery run rate at 93.5% of capacity during the week ended April 6, a three-month high.

Wire reports suggest a 600,000 barrel (bbl) draw occurred in U.S. commercial crude stocks during the second week of April.

EIA last reported crude stocks at 428.6 million bbl on April 6, down 104.7 million bbl or 19.6% against the comparable year-ago period. Commercial crude stocks in the United States slipped below the five-year average during the week ended March 17 for the first time since 2014.

April is a transitional month for gasoline, as refiners move to summer specified fuel specifications, with EIA data showing gasoline stocks at 238.9 million bbl on April 6, 2.8 million bbl above year ago. Gasoline inventory increased 1.6 million bbl from the first week of April to the second in 2017, while the five-year average declined 1.1 million bbl during the two weeks.

EIA data shows distillate fuel stocks at a 128.4 million bbl four-month low on April 6, down 21.8 million bbl or 14.5% against year prior, while below the five-year average for a fifth consecutive week. Strong production, which averaged at a 5.256 million barrels per day (bpd) three-month high during the week-ended April 6, tilts the likelihood for a modest build to have occurred last week.

The American Petroleum Institute (API) will publish its weekly report at 4:30 p.m. ET, and the EIA their dataset at 10:30 a.m. ET Wednesday.

Strong demand for oil underpinned by robust economic growth has worked down excess oil inventory, with the International Energy Agency late last week projecting a surplus above the five-year average in commercial oil stocks held by the Organization for Economic Cooperation and Development 35 country bloc to be erased in May.

Total oil products demand in the United States, which is part of the OECD, has outpaced year ago by nearly 1.0 million bpd or 4.9%, with total commercial oil stocks down 167.2 million bbl or 8.3% at 1.857 billion bbl.

"The world economy continues to show broad-based momentum," said the International Monetary Fund in a blog Tuesday, with IMF in January forecasting global economic growth at 3.9% for this year and 2019.

"That forecast is being borne out by continuing strong performance in the euro area, Japan, China, and the United States, all of which grew above expectations last year. We also project near-term improvements for several other emerging market and developing economies, including some recovery in commodity exporters," said IMF.

Analysts with the fund said economic growth is being driven by "accelerations in investment and, notably, in trade." "Against that positive backdrop, the prospect of a similarly broad-based conflict over trade presents a jarring picture," said IMF. "[T]he prospect of trade restrictions and counter-restrictions threatens to undermine confidence and derail global growth prematurely."

NYMEX May West Texas Intermediate crude futures settled up 30 cents at $66.52 bbl with the June contract gaining 31 cents to $66.51 bbl, holding near parity with the May contract which expires at Friday's closing bell. May WTI futures held support at $65.47 with a $65.56 bbl intraday low.

ICE June Brent crude settled up 16 cents at $71.58 bbl after reversing higher from a $70.83 bbl intraday low, with support at $70.42 bbl.

NYMEX May RBOB futures settled up a fractional 13 points at $2.0412 gallon, reversing off a $2.0253 gallon low following a test of support at $2.0235 gallon. NYMEX May ULSD futures settled down 1.32 cents at $2.0571 gallon, paring a decline to a $2.0490 gallon session low after testing initial support at $2.0485 gallon.

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

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