Oil Rallies in Midday Trade

CRANBURY, N.J. (DTN) -- New York Mercantile Exchange nearest delivered oil futures rallied in response to weekly supply data released midmorning by the Energy Information Administration that detailed an unexpected drawdown in commercial crude supply in the United States and larger-than-estimated decline in gasoline stocks for the week-ended March 8.

EIA also reported a 100,000 bpd decline in domestic crude production from a record high to 12.0 million bpd, aligning with weekly rig activity from Baker Hughes showing the U.S. oil rig count fell by 23 during the three-week period ended March 8 to a 10-month low.

On Tuesday, EIA revised down its growth projection for U.S. oil production for 2019 by 110,000 barrels per day (bpd) to 12.3 million bpd and by 200,000 bpd for 2020 to 13.0 million bpd.

A 3.9 million bbl draw in commercial crude inventory in the United States ran contrary to an expected build of about 2.75 million bbl to have occurred last week, with the decline greater than an American Petroleum Institute reported 2.85 million bbl draw. At 449.1 million bbl, commercial crude stocks are still at a surplus, with inventory 18.1 million bbl or 4.2% above the same week in 2018.

Gasoline stocks were drawn down a fourth consecutive week last week, declining 4.6 million bbl to a 10-week low at 246.1 million bbl. Since mid-February when the string of draws began, gasoline inventory has fallen 12.2 million bbl or 4.7%.

Distillate fuel stocks increased an unexpected 400,000 bbl to 136.4 million bbl, and moved back above the comparable year-ago total, holding a 3.3 million bbl or 2.5% surplus against year ago.

Total commercial crude and products inventories have declined 31.0 million bbl or 2.5% over the most recent four-week period to 1.2345 billion bbl, although remain a sizable 36.4 million bbl or 3% above year ago.

Nymex April West Texas Intermediate spiked to a $58.08 bbl four-month high on the spot continuous chart immediately following the release of the EIA data, trading up $1 near $57.90 bbl late morning. Intercontinental Exchange May Brent futures were up $0.60 near $67.25 bbl after trading at a $67.51 3-1/2 week spot high.

Nymex April RBOB futures surged to a $1.8502 nearly five-month high on the spot continuous chart, trading up 2.4 cents at $1.8395 gallon late morning. April ULSD futures edged up 0.6 cents to near $1.9920 gallon.

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

(CZ)

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