NEW YORK (DTN) -- New York Mercantile Exchange oil futures trimmed losses on Thursday morning after European Central Bank President Mario Draghi surprised the market, saying the ECB would consider implementing additional stimulus measures in March because of deteriorating economic conditions.
Draghi, who spoke after the ECB's policy meeting that left interest rates unchanged, said the central bank must explore new policy options to stay credible, though he didn't elaborate. Draghi said the persistent decline in oil prices could have an effect on the economy. ECB's board of governors is scheduled to meet on March 10.
His dovish comments, coming in the wake of a rout in equities and oil markets, prompted a rebound in the stock market on Wall Street, with oil prices also trimming losses.
Oil futures were under continued selling pressure this week on building global supply that's expected to get worse with the lifting of sanctions on Iranian crude exports, and on slowing growth in China that is feared to weigh negatively on the world economy and oil demand.
Those worries resonated overnight after the release of bearish data from the American Petroleum Institute late Wednesday, which showed more-than-expected stock increases for U.S. crude oil and refined products for the week ended Jan. 15. The Energy Information Administration's weekly oil data is due out at 10 a.m. CT.
At 8 a.m. CT, NYMEX March WTI crude contract was down 15 cents at $28.20 barrel, with the February contract that expired Wednesday having posted a 12-1/2 year spot low of $26.19 Wednesday. ICE March Brent futures eased 9 cents to $27.79 bbl, near a $27.10 bbl better-than 12-yar low on the spot continuation chart.
NYMEX February ULSD futures slipped 0.88 cents to $0.8569 gallon settlement, off a 12-year low on the spot continuation chart of $0.8487. The February RBOB futures contract eased 0.34 cents to $1.0143 gallon after inside trade, trading at a $1.005 seven-year spot low on Tuesday.
On Wall Street, the Dow Jones Industrial Average was up nearly 0.5% shortly after the open but has again reversed lower, while the dollar surged to the highest level since early December 2015.
The dollar has attracted investors fleeing risk in other asset classes in the past three months, with analysts saying about $17 trillion have been wiped out of the global market capitalization this year so far.
API reported late Wednesday that crude inventories in the United States climbed 4.61 million bbl during the week-ended Jan. 15, surpassing a 2.7 million bbl stock increase a survey of analysts had projected. The total build also included a surprise 500,000 bbl crude oil stock build at Cushing, Oklahoma, the delivery point for NYMEX West Texas Intermediate crude futures. The market expected a draw of 500,000 at the key hub.
API also reported a 4.7 million bbl stock increase for gasoline, more than double the 2.2 million bbl build the market forecast. Distillate fuel supply posted a 1.5 million bbl gain that was slightly above the 1.3 million build expected by analysts.
George Orwel can be reached at firstname.lastname@example.org
© Copyright 2016 DTN/The Progressive Farmer. All rights reserved.