Oil Futures Extend Rally on API Data

Oil Futures Extend Rally on API Data

NEW YORK (DTN) -- New York Mercantile Exchange oil futures rallied to new highs Wednesday morning as the U.S. dollar continued to range lower while the American Petroleum Institute reported petroleum stock draws across the board in the United States.

The market has since pared gains ahead of weekly oil supply data from the U.S. Energy Information Administration due at 10:30 AM ET. The market will also keep an eye on the U.S. Federal Open Market Committee's expected policy announcement at 2:00 PM ET.

At 9:00 AM ET, NYMEX June West Texas Intermediate crude oil futures advanced 80cts to $44.84 bbl, off a six-month spot high of $45.18. June Brent crude oil futures on the IntercontinentalExchange surged 84cts to $46.58 bbl, off a near six-month spot high of $47.05.

In products trade, NYMEX May ULSD futures climbed 2.47cts to $1.3572 gallon, off a five-month spot high of $1.3655. The NYMEX May RBOB futures contract added 0.98cts to $1.5888 gallon, moving off a fresh eight-month spot high of $1.5934.

On Wall Street, equities and the dollar moved lower this morning ahead of a policy announcement by the U.S. Federal Reserve this afternoon, with most analysts predicting the Fed will not raise interest rates.

The API statistics were bullish and boosted the prospect that the oil supply and demand balance would narrow during the third or fourth quarter. Demand is expected to continue to increase in spring and through the summer's peak driving season.

According to sources, API's data released to customers showed a surprise 1.1 million bbl crude stock draw for the week-ended April 22, missing an expected build of 1.2 million bbl. However, stocks at Cushing, Oklahoma, the delivery point for NYMEX West Texas Intermediate crude posted a 1.9 million bbl build.

API also reported a 400,000 bbl stock draw for gasoline, which is less than an expected 1.3 million bbl decline, and distillate supplies fell 1.0 million bbl during the week profiled versus a 1.2 million bbl projected drop.

The Energy Information Administration is scheduled to release its weekly oil data this morning at 10:30 AM ET.

Oil data from China were also bullish, showing the country's product demand improved in March. Crude oil imports by China rose 22% year-over-year to 7.7 million bpd, according to government data, while implied oil demand rose by 411,000 bpd year-over-year, which brought first-quarter average demand growth to 180,000 bpd year-over-year.

Gasoline and liquefied petroleum gas were the main growth drivers, said Barclays Capital in a note to clients. Diesel demand, although still lower year-over-year, had a much smaller decline than in January and February.

Since mid-February, oil futures have been rising on speculative activity, with bullish investors hoping the market will rebalance as demand picks up and U.S. crude oil production falls. Those hopes linger despite failed attempts by the Organization of Petroleum Exporting Countries to freeze production.