WTI, Brent Below $50 Bbl

CRANBURY, N.J. (DTN) -- Nearest delivered oil futures on the New York Mercantile Exchange and Brent crude on the IntercontinentalExchange settled lower Thursday, with both West Texas Intermediate and Brent ending below $50 bbl after cracking above the psychological benchmark earlier in the session for the first time in 2016.

The lower close by July WTI futures ends its advance at three consecutive sessions, settling down a modest 8cts at $49.48 bbl after rallying to a $50.21 7-1/2 month high on the spot continuous chart. July Brent crude on ICE settled a penny below the $50 price point, down 15cts at $49.59, after scurrying to a $50.51 near seven-month spot high.

Oil products led Thursday's decline, with June RBOB futures settling down 2.21cts at $1.6195 gallon -- the lowest close for the contract in eight sessions, continuing its retreat from Tuesday's $1.6664 better-than nine-month high on the spot continuation chart. July RBOB futures ended the session down 2.19cts at $1.6267 gallon, holding a modest premium ahead of the June contract's expiration on May 31.

June ULSD futures settled down 1.14cts at $1.5013 gallon with the July ULSD contract 1.07cts lower at a $1.5062 settlement.

The brief move above the $50 bbl benchmark by the WTI contract follows supportive data on inventory and production, with the Energy Information Administration on Wednesday reporting commercial crude oil supply was drawn down 4.2 million bbl during the week ended May 20, with stock levels down 6.3 million bbl so far in May. U.S. crude production also declined for the 11th consecutive week through May 20, down 311,000 bpd since early March to 8.767 million bpd -- the lowest domestic output rate since July 2014.

However, an overbought market, with noncommercial accounts last reported by the Commodity Futures Trading Commission at a 22-month high net-long position, and market expectations that pinned $50 bbl as the price point for a renewal in drilling dried up buying interest ahead of the approaching Memorial Day holiday.

Moreover, the U.S. dollar moved off lows amid increasing speculation the Federal Reserve would hike the key federal funds rate when it meets in June following supportive data on the economy.

After weakening to an eight-day low in reaction to April data showing business spending remained in a rut even as durable goods orders surged 3.4% on strong results for the transportation sector, the U.S. dollar trimmed the decline on housing data.

The National Association of Realtors reported a 5.1% increase in pending home sales in April, the third consecutive monthly advance, with the sales rate reaching the highest level in more than a decade.

Also today, the Department of Labor reported a weekly decline in initial unemployment claims for the week-ended May, and while the four-week average increased 2,750 to 275,750, initial jobless claims have held below 300,000 for 64 consecutive weeks -- the longest such period in more than 40 years.

Brian L. Milne can be reached at brian.milne@dtn.com

(BAS)

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