Oil Mixed on Unexpected Rise in Supply

NEW YORK (DTN) -- New York Mercantile Exchange oil futures were mixed with a downside bias after a government report showed an unexpected build in domestic crude oil inventory while oil products data were mixed.

NYMEX September West Texas Intermediate crude futures dropped below the psychological $50 bbl level to a fresh 3-1/2 month spot low of $49.67 in reaction to a 2.5 million bbl build in commercial crude supply during the week ended July 17 reported by the Energy Information Administration at 9:30 a.m. CDT.

The supply build contrasted with market expectations for a 2.8 million bbl drawdown to be reported for last week, and lifted U.S. crude inventory to 463.9 million bbl, 92.8 million bbl or 25.0% more than during the comparable year-ago period. As part of that build, crude oil stocks at the Cushing, Oklahoma, supply hub that also serves as the delivery point for NYMEX WTI futures, increased 500,000 bbl

The American Petroleum Institute late Tuesday reported a 2.3 million bbl crude stock build for the week profiled, with Cushing stocks up 900,000 bbl.

At 10 a.m. CDT, NYMEX September WTI crude futures were down 49 cents at $50.37 bbl. The NYMEX August ULSD futures contract was up 0.56 cents at $1.6840 gallon, while August RBOB futures dropped 2.39 cents to $1.8970 gallon, holding above a four-day low at $1.8636.

EIA also detailed a 1.7 million bbl stock draw for gasoline vs. an expected build of 800,000 bbl for the week, while gasoline production jumped 451,000 bpd to 10.109 million bpd, 8.0% higher year-on-year.

Distillate fuel stockpiles edged up 234,000 bbl for the week vs. an expected 2.5 million bbl build.

EIA also detailed a 346,000 bpd or 3.7% jump in implied gasoline demand to 9.749 million bpd, the highest weekly demand rate since August 2007. Implied demand for distillate fuel spiked 539,000 bpd or 15.6% to a 4.004 million bpd five-week high.

George Orwel can be reached at george.orwel@telventdtn.com