DTN Oil

WASHINGTON (DTN) -- Nearby delivery month West Texas Intermediate futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled Wednesday little changed, pressured by a surging U.S. dollar and selloff in financial markets. Meanwhile, the refined product contracts added some 1% in value on an unexpected drop in gasoline and distillate supplies for the week ended Sept. 18.

The draw in distillate stocks, boosted by a sharp increase in implied demand, coincided with the release of preliminary industrial data for the Eurozone and United States that showed ongoing improvement in September, with domestic manufacturers reporting a healthy rise in business activity this month, rounding off a solid third quarter. U.S. Manufacturing PMI Business Activity Index registered 53.5 in early September, up slightly from a 53.1 reading month prior, with new orders climbing at the quickest pace since February 2019 driving the expansion.

Oil futures got a leg up early in the session on stronger-than-expected industrial data out of Germany, with manufacturers in Eurozone's largest economy reporting an expansion to a 56.6 reading. In contrast, service sector took a hard hit from the recent spike in coronavirus infections across the continent, with both Germany and France reporting a steep drop in business activity in those industries.

Energy Information Administration inventory data for the week-ended Sept. 18 released midmorning was overall bullish against expectations, detailing across-the-board draws from U.S. commercial petroleum supplies and higher implied demand for refined fuels. Domestic distillate supplies declined 3.4 million barrels (bbl) from the previous week and demand reversed off the 17-week low 2.809, up 1.150 million barrels per day (bpd) for the week profiled.

Still, a large overhang in U.S. distillate inventories, up 21.1% against the five-year average, continues to weigh heavily on the oil market, pressuring refinery margins and run rates. Domestic refiners once gain cut run rates to 74.8% of operational capacity in the week-ended Sept. 18, while reducing crude throughput by 118,000 bpd to 13.370 million bpd.

Gasoline stockpiles eroded for the seventh consecutive week through Sept. 18, falling a steep 4 million bbl versus calls for a modest 500,000 bbl build, while crude stockpiles declined 1.6 million bbl to 494.4 million bbl, narrowing a five-year average surplus to 13%, according to EIA data.

The U.S. dollar index pushed 0.45% higher against a basket of foreign currencies to a nine-week high 94.495, pressuring WTI futures in afternoon trade. At settlement, NYMEX November WTI edged up 13 cents to $39.93 bbl, with the ICE November Brent contract finishing the session little changed at $41.77 bbl. The December Brent contract ended at a $0.49 premium to November delivery. NYMEX October ULSD futures advanced 1.14 cents to $1.1075 gallon, and front-month RBOB futures gained 1.7 cents to $1.1813 gallon.

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

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