Oil Lower on Oversupply Concerns
NEW YORK (DTN) -- New York Mercantile Exchange oil futures moved lower Thursday morning amid concerns over a growing oil supply glut after both industry and government data showed weekly crude oil stock builds that tripled market expectations.
A strengthening U.S. dollar also added downward pressure on oil futures, with the greenback rising to a one-week high versus peer currencies this morning on hawkish comments by a Federal Reserve official indicating the possibility for a hike in the U.S. benchmark interest rate next month. The dollar briefly halted its advance after the release of reports on U.S. durable goods orders and weekly jobless claims.
At 9 a.m. ET, NYMEX May West Texas Intermediate crude oil futures were down $1.04 at $38.75 bbl, and have since traded at a one-week spot low at $38.33. The May Brent futures contract traded on the IntercontinentalExchange dropped 88cts to $39.59 bbl, and has since slipped to a fresh one-week low of $39.22.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
In products trade, NYMEX April ULSD futures eased 1.71cts to $1.1869 gallon, and have since fallen to a fresh one-week low of $1.1752. April RBOB futures dropped 1.75cts to $1.4366 gallon, and have since slid to a $1.4202 gallon three-day low. RBOB’s downside is limited by seasonal strength and strong demand for gasoline.
NYMEX oil futures trading volumes are expected to be thin today ahead of the three-day Easter holiday weekend.
On Wall Street, major indices eased with the Dow Jones Industrial Average plunging more than 100 points while the dollar surged after St. Louis Federal Reserve Bank President James Bullard’s hawkish comments. Bullard suggested Wednesday that a hike in the federal funds rate could come as early as April, a statement that contradicts the Fed’s dovish posture after last week’s Federal Open Market Committee meeting.
The dollar’s advance, which has strengthened for five straight days from a five-month low, has been tempered this morning after the U.S. Census Bureau reported durable goods orders for February fell 2.8%, the third decline in four months. Also, the Labor Department reported weekly jobless claims rose 6,000 to 265,000.
On Friday morning the Bureau of Economic Analysis is scheduled to release the final reading of fourth quarter 2015 U.S. Gross Domestic Product.
On Wednesday, the Energy Information Administration reported crude held in U.S. storage increased by 9.4 million bbl during the week-ended March 18, an increase that topped the 8.8 million bbl stock build reported by the American Petroleum Institute and well above market expectations for a 3.0 million bbl increase.
George Orwel can be reached at george.orwel@dtn.com
(BAS)
Copyright 2016 DTN/The Progressive Farmer. All rights reserved.