EIA Data Stoked Early Rally Wednesday

NEW YORK (DTN) -- New York Mercantile Exchange oil futures rallied after the U.S. Energy Information Administration reported a bigger-than-expected weekly domestic crude oil stock draw and increases in demand for crude and refined products. However, the market pared gains at last look as traders continued to examine the oil report for the week-ended July 31, picking out other parts that weren’t bullish.

The EIA’s data was bullish for crude, detailing a 4.4 million bbl crude stock decline for the week-ended July 31, more than twice the 1.8 million bbl draw the market expected. It’s also a bigger draw than the 2.4 million bbl crude stock decline the American Petroleum Institute reported late Tuesday.

The weekly supply data initially overshadowed a stronger dollar, which surged to a 3-1/2-month high earlier Wednesday on sentiment the Federal Reserve would raise interest rates in September.

At 9:50 a.m. CDT, NYMEX September crude futures were 20 cents higher at $45.94 bbl, off a two-day high of $46.70. The NYMEX September ULSD futures contract trimmed gains, up 0.75 cents at $1.5550 gallon, having traded earlier at a session high of $1.5693. The NYMEX September RBOB futures contract was holding onto a gain of 1.01 cents to $1.6953 gallon, pared from a two-day high at $1.7190 gallon.

The market is focused on fundamentals as well as the dollar rally, with both impacting oil futures.

EIA reported crude stocks at the Cushing, Oklahoma, supply terminal that serves as the delivery point for NYMEX West Texas Intermediate futures fell 542,000 bbl last week, matching data issued late Tuesday by API but more than the 300,000 bbl draw the market expected.

EIA’s products data were broadly mixed as were the API report.

EIA showed gasoline and distillate stocks both rising for the week, up 811,000 bbl and 709,000 bbl, respectively, while the market expected a 700,000 bbl draw for gasoline and a 300,000 bbl increase for distillates.

On the demand side, the EIA report was broadly bullish, showing a 348,000 bpd increase for gasoline and a 152,000 bpd rise for distillates.

On crude demand, the report showed a 313,000 bpd rise in crude inputs, with refinery runs up 1.0% to 96.1% of operable capacity.

Separately, the Institute for Supply Management reported the U.S. services sector grew in July at the fastest rate in a decade, while payroll firm ADP said the rate of job creation slowed in July.

The Federal Reserve is expected to take into account the data point on jobs before deciding whether to raise interest rates later this year.

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