Oil Futures Mixed on Supply Build

WASHINGTON (DTN) -- After choppy trade for most of the session, crude and product futures on the New York Mercantile Exchange and the Brent contract on the Intercontinental Exchange settled mixed on Wednesday, weighed down by a larger-than-expected build in U.S. commercial crude supplies during the week of Jan. 24 and ongoing concerns that the coronavirus could weaken China's economic growth in the current quarter.

At settlement, NYMEX March West Texas Intermediate futures slipped $0.15 to $53.33 barrel (bbl) and ICE March Brent futures ended the session at $59.81 bbl. NYMEX February RBOB futures surged 2.76 cents to $1.5308 gallon and front-month ULSD futures dropped 1.24 cents to $1.7035 gallon.

Oil futures swung between modest gains and losses Wednesday as markets grappled with uncertainty related to Wuhan 2019-nCov virus in China and a mixed inventory report on U.S. crude and petroleum stocks for the week ended Jan. 24.

The number of confirmed cases of the Wuhan coronavirus has overtaken the 2003 SARS outbreak, while multiple countries evacuated their citizens from China's infected regions. As of Wednesday, there were 6,061 confirmed cases of the virus and 132 deaths, according to Chinese official statistics. That number grew by more than 30% since late Tuesday. Against this backdrop, the World Health Organization once again issued a statement that the virus is "an emergency in China," but declined to declare the outbreak an international health crisis. Some respiratory experts forecast the outbreak likely to peak in the next 10 days after gradually plateauing, provided the virus doesn't spread further to other parts of the world.

During an afternoon news conference, Federal Reserve Chairman Jerome Powell said it was "too early to say" whether the coronavirus outbreak may force policy change at the central bank, with the Fed leaving benchmark interest rates unchanged in a 1.5% and 1.75% range. The Federal Reserve does plan to slow Treasury purchases in the second quarter. Following the announcement, U.S. equities moved mixed with Dow Jones Industrials edging up 0.04% to 28,734.45 and S&P 500 dipped 0.09% to 3,273.4.

A larger-than-expected build in domestic crude stockpiles weighed on prices Wednesday. U.S. Energy Information Administration reported commercial crude oil inventories rose 3.5 million barrels (bbl) last week contrary to expectations for a 1.7 million bbl drawdown. Gasoline stocks again increased 1.2 million bbl to a 39-year high last week at 261.2 million bbl. Still, front-month RBOB gasoline contract drifted higher in afternoon trade, as traders expected a much higher build.

Liubov Georges can be reached at liubov.georges@dtn.com

(CZ)

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