Oil Futures Lower Amid Profit Taking

Oil Futures Lower Amid Profit Taking

NEW YORK (DTN) -- New York Mercantile Exchange oil futures moved lower Thursday morning as concerns about a glut of supply and weak economic data triggered profit-taking, but the downside was curbed by lingering bullish sentiment and a weakening dollar.

Data released this morning showed the U.S. economy stalled early this year while applications for unemployment benefits rose last week. The Bureau of Economic Analysis said U.S gross domestic product grew in the first quarter at an annualized rate of 0.5% versus an expected 0.7% growth rate. The Labor Department also said initial jobless claims rose 9,000 to 257,000 last week.

At last look, NYMEX June West Texas Intermediate crude oil futures eased 8cts to $45.25 bbl, reversing off a fresh six-month spot high of $45.71. The June Brent crude oil futures contract on the IntercontinentalExchange slipped 8cts to $47.10 bbl, reversing off a near six-month spot high of $47.59.

In products trade, NYMEX May ULSD futures slipped 0.17cts to $1.3778 gallon, reversing off a fresh five-month spot high of $1.3914. The NYMEX May RBOB futures contract declined 1.60cts to $1.5648 gallon after inside trade. The May contract expire at Friday's close.

On Wall Street, equities moved lower this morning while the dollar fell to a two-week low versus a basket of six rival currencies. The dollar fell after the Bank of Japan surprised the market on Thursday by deciding against fresh monetary stimulus despite a lack of inflation, pushing the yen higher versus the dollar.

For its part, the U.S. Federal Reserve on Wednesday decided to keep benchmark interest rates unchanged. The dollar fell more than 2.0% versus the yen and was down 0.55% versus a basket of six major currencies at last look.

Oil futures have garnered support in the past two months largely by a change in psychology and hope by bullish investors that rising demand and falling U.S. production would rebalance the market.

The U.S. Energy Information Administration on Wednesday reported U.S. crude supplies climbed 2.0 million bbl in the week-ended April 22, while U.S. crude production fell 15,000 bpd to 8.938 million bpd, the seventh straight decline. EIA also reported an unexpected 1.6 million bbl gasoline stock build while distillate stocks fell 1.7 million bbl, with implied demand for the fuels falling 129,000 bpd and 154,000 bpd, respectively.

On Friday, oil services firm Baker Hughes, Inc. will release its weekly oil rig count, which would in theory signal whether domestic oil production rose or fell this week.

Overseas, Platts reported today that Chinas apparent demand for oil fell 1.6% year-on-year in March, as strong demand for gasoline, LPG and jet fuel was offset by sharp declines in consumption of gasoil and fuel oil due to reduced industrial and economic activity in the world's second biggest economy.