Oil Futures Spike on EIA Data

CRANBURY, N.J. (DTN) -- Oil futures traded on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange spiked in reaction to a bullish slate of weekly oil statistics released midmorning by the Energy Information Administration, which included preliminary data showing gasoline demand at a record weekly high.

EIA reported across the board inventory drawdowns during the week-ended April 13, with total commercial crude and oil stocks in the United States falling below the five-year average, down 10.6 million bbl at 1.181 billion bbl. Total U.S. commercial oil inventories are down a steep 150.1 million bbl or 11.3% against year prior.

The move below the five-year average is significant. The Organization of the Petroleum Exporting Countries and 10 non-OPEC oil producers including Russia said erasing the surplus in Organization for Economic Cooperation and Development's commercial oil inventories above their five-year average was a goal in their two-year agreement cutting their production which runs through end year. The United States is one of the 35 countries that make up the OECD. Last week in their monthly Oil Market Report, the International Energy Agency said OECD inventory could erase their once bloated surplus against the average as early as May.

Part of the driver in lowering U.S. oil stocks has been robust demand, with EIA reporting a 584,000 bpd surge in implied gasoline demand to a record weekly high at 9.857 million bpd during the second week of April. Gasoline supplied to the primary market has averaged 9.145 million bpd this year through April 13, up 298,000 bpd or 3.4% against the comparable year-ago period.

U.S. gasoline supply was drawn down for the seventh consecutive week, down 3.0 million bbl to a 236.0 million bbl low for 2018, while 1.7 million bbl less than year prior. Distillate fuel stocks were drawn down 3.1 million bbl to a 125.3 million bbl nearly five-month low, sitting 22.9 million bbl or 15.5% below year ago on April 13. Implied distillate demand jumped 186,000 bpd to 4.356 million bpd during the week reviewed.

Total demand for U.S. oil products surged 1.623 million bpd to a 21.434 million bpd better-than eight-month high during the second week of the second quarter. For the year to April 13, implied oil products demand has outpaced the comparable year-ago period by 1.041 million bpd or 5.3% at 20.667 million bpd.

Commercial U.S. crude stocks were drawn down about 1.1 million bbl to 427.6 million bbl, while down 104.8 million bbl or 19.7% compared with year prior, now holding below the five-year average for a fifth consecutive week. Commercial domestic crude supply moved below the five-year average in mid-March for the first time since 2014.

U.S. crude oil production edged up 15,000 bpd to a fresh record high at 10.54 million bpd, with output 1.048 million bpd above the first week of 2018. EIA, which projects U.S. oil production would average 10.7 million bpd this year, on Monday said it expects U.S. shale oil production to increase by 125,000 bpd in May to 6.996 million bpd.

Late morning, NYMEX May WTI futures were up $1.55 at $68.07 bbl after trading at a new better-than three-year, four-month high on the spot continuous chart at $68.45 bbl. The June contract was trading at near parity to the May contract, which expires at Friday's close to trade. ICE June Brent crude raced to a $73.41 bbl high, matching the Nov. 28, 2014 high, while up $1.54 at $73.12 bbl late morning.

NYMEX May RBOB futures traded at a $2.0783 gallon high, holding just below the April 11 $2.0788 7-1/2 month spot high, while up 2.11cts at $20623 gallon late morning.

NYMEX May ULSD futures rallied to a $2.0993 one-week high, trading 3.05cts higher at $2.0876 gallon late morning.

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

(BE)

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