CRANBURY, N.J. (DTN) -- Oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange ended trading on the final day of February the way the session began, shallowly mixed, as the April Brent, March ULSD and March RBOB futures contracts expired.
The contracts mostly consolidated following two sessions of gains supported by tightening global market conditions led by production cuts by the Organization of the Petroleum Exporting Countries, with the advance accelerating after data released midweek showed U.S. crude imports slid to a 23-year low and commercial crude stocks in the United States unexpectedly plunged 8.6 million barrels (bbl) to a four-week low last week.
Energy Information Administration data for the week-ended Feb. 22 also detailed a sharp narrowing in year-on-year crude and gasoline oversupply and strong implied demand for oil products domestically and by foreign buyers. The United States was a net exporter of oil during the week for only the second week on record, with implied demand for oil products running at a quicker pace than in 2018 through late February, up 269,000 barrels per day (bpd) or 1.3%.
EIA showed implied distillate demand cumulatively through Feb. 22 at 4.205 million bpd, 91,000 bpd or 2.2% above the comparable year-ago pace, an indication of a strong economy. Macroeconomic statistics released Thursday demonstrated a U.S. economy on solid footing, with delayed data from the Bureau of Economic Analysis estimating fourth quarter annualized growth at a greater-than-expected 2.6%. The growth rate slowed from third quarter's 3.4% pace, while BEA said the U.S. economy expanded at a 2.9% annualized rate, above the 2.2% growth rate for 2017.
Also defying market expectations, the Chicago Purchasing Managers Index spiked from 56.7 in January to 64.7 in February, a 14-month high, and contrasting with estimates that the index would decline to 56.1.
Reflecting a tightening global oil market and less crude being sent to U.S. shores, Nymex West Texas Intermediate crude futures settled at its second highest settlement of 2019 at $57.22 bbl, up $0.28, even though domestic production reached a 12.1 million bpd record high last week, per EIA statistics.
WTI futures advanced despite a stronger U.S. dollar, which reversed off a three-week low, and news the Department of Energy announced the sale of 6.0 million bbl of crude oil from the Strategic Petroleum Reserve (SPR). The SPR sale is to fulfill requirements of the Bipartisan Budget Act of 2015 and carry out an SPR modernization program. Bids are due by March 13 with deliveries to take place in April and May.
IEA April Brent futures expired down $0.36 at $66.03 bbl, with the May contract settling at $66.31. Brent is in backwardation through 2023 delivery with the expiration of the April contract, a bullish market structure.
Nymex March ULSD futures expired up $0.0019 at $2.0235 gallon, with the April contract gaining $0.0052 with a $2.0273 gallon settlement. ULSD futures are in backwardation in the second quarter.
Nymex March RBOB futures expired down $0.0047 at $1.6293 gallon, reversing off a $1.6490 fresh 3-1/2 month high on the spot continuous chart before rolling off the board. April RBOB futures settled down $0.0083 at $1.7523 gallon, reversing lower from a $1.7646 intraday high after testing resistance at the $1.7652 50% retracement point for the 2018 downtrend.
Brian Milne can be reached at Brian.Milne@dtn.com
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