CRANBURY, N.J. (DTN) -- New York Mercantile Exchange nearest delivered oil futures and Brent crude on the Intercontinental Exchange settled mixed Tuesday in choppy activity after investors contending with bullish and bearish factors seemed ready to await weekly supply data due out this afternoon and Wednesday morning for direction.
An exception was the gasoline market, with the April RBOB contract rallying to a better than four-month high on the spot continuous chart at $1.7735 gallon, and the gasoline crack spread rallied to its highest point since August, as the preseason rally unfolds.
At $17.67 per barrel (bbl) against West Texas Intermediate, the gasoline crack is the highest since Aug. 31, climbing from distressed margins, especially against the Brent contract, with gasoline negative versus the international crude marker for the first seven weeks of 2019. The RBOB-Brent crack settled at $8.37 bbl.
NYMEX April RBOB futures settled at $1.7674 gallon, up 1.84 cents.
NYMEX April WTI futures settled down $0.03 at $56.56 bbl, pressured as the U.S. dollar advanced to a 2-1/2-week high. ICE May Brent futures settled up $0.19 at $65.86 bbl.
NYMEX April ULSD futures settled up 0.21 cent at $2.0164 gallon.
Gasoline supply drawdowns over the previous two weeks amid seasonal refinery maintenance and strong demand have bolstered the RBOB contract, with data from the Energy Information Administration showing gasoline inventory having fallen 4.715 million bbl, or 1.8%, since mid-January when they reached a record high of 259.615 million bbl. Compared against year ago, the decline is more significant, with gasoline inventory shrinking a year-on-year oversupply stance by 12.5 million bbl over the period to 3.1 million bbl as of Feb. 22.
Market expectations are for gasoline stocks to have declined by 1.75 million bbl during the week-ended March 1, and estimate a 1.5 million bbl draw for distillate stocks. U.S. crude stocks are seen up 1.5 million bbl for the week profiled after an unexpected 8.6 million bbl draw the previous week.
Despite less domestic demand for crude amid refinery turnaround activity that will continue for the next few weeks, domestic crude stocks dropped in late February on a plunge in U.S. crude imports to a 23-year low and strong demand for exports. Trade sources also point to shipping delays in the Houston Ship Channel.
The American Petroleum Institute will release supply data for the week ended March 1 at 4:30 p.m. EST, and the EIA their weekly report at 10:30 a.m. EST Wednesday.
Traders were in a tug-of-war Tuesday between concerns over global oil demand as China's economy slows and production cuts from the Organization of the Petroleum Exporting Countries amid steep production cuts.
The restart of Libya's El Sharara oilfield, the OPEC nation's largest at 315,000 barrels per day (bpd), also capped the upside for crude, with the operator expected to lift initial output at the field that has been shut since December to 80,000 bpd. In contrast, a Wall Street Journal article on Monday questioned the production forecast of U.S. shale oil drillers after tight oil operators were forced to reduce output expectations because wells were drilled too closely together.
In delayed monthly data, EIA shows U.S. crude production slid 56,000 bpd from November to 11.849 million bpd in December, although the decline was due to lower production in waters in the Gulf of Mexico. Crude production rates in New Mexico, North Dakota and Texas increased from November to December.
Brian L. Milne can be reached at email@example.com
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