Oil Futures Plummet on Supply Data

Oil Futures Plummet on Supply Data

NEW YORK (DTN) -- New York Mercantile Exchange oil futures ended lower Thursday afternoon, with crude falling to a two-month low after the Energy Information Administration released bearish supply data that triggered a selloff.

The EIA's weekly oil supply data showed smaller-than-expected drawdowns in crude and oil product inventories in the United States during the week-ended July 1, with the weekly declines also well below the large draws reported late Wednesday by the American Petroleum Institute that had triggered an afterhours rally for oil futures.

The EIA report was considered so bearish it undercut bullish economic data released earlier in the day, triggering a reversal and subsequent selloff in oil futures.

At settlement, NYMEX August West Texas Intermediate crude oil futures dropped $2.29, or 4.8%, to $45.14 per barrel (bbl), off a two-month spot low of $44.87 bbl. September Brent on the IntercontinentalExchange fell $2.40 or 4.9% to a $46.60 bbl settlement, off a two-month low on the spot continuation chart of $46.15.

In products trade, NYMEX August ULSD futures plunged 6.05 cents, or 4.0%, to a $1.4106 gallon settlement, off a 1-1/2 month spot low of $1.4009. The August RBOB futures contract plummeted 6.98 cents or 4.9% to a $1.3631 gallon settlement, off a four-month spot low of $1.3533.

On Wall Street, the main U.S. equity indices were mixed with Dow Jones Industrial Average and S&P 500 lower while Nasdaq 100 higher. The U.S. dollar reversed higher versus a basket of six major currencies, with a stronger greenback bearish for oil futures.

EIA data showed domestic crude oil stockpiles fell by 2.2 million bbl during the week-ended July 1 compared with an expected decline of 2.8 million bbl while API reported a 6.74 million bbl draw. This was the seventh-straight weekly decline for crude supply.

Crude stocks at Cushing, Oklahoma, delivery point for NYMEX WTI crude were down 82,000 bbl to 64.148 million bbl. Domestic crude production tumbled by 194,000 barrels per day (bpd) to 8.428 million bpd, the lowest since May 2014. EIA reported a 122,000 bbl stock draw for gasoline versus a 1.0 million bbl decline expected by the market and a 3.6 million bbl draw reported by API.

Distillate stockpiles dropped 1.6 million bbl, EIA said, compared with an expected 1.2 million bbl stock draw while API reported a 2.3 million bbl draw. Implied demand for distillates fell, with refinery crude inputs also down for the week.

Overseas, Royal Dutch Shell lifted force majeure on its Nigerian oil exports that were disrupted weeks ago following an attack on a pipeline in the Niger Delta.

Earlier, the futures complex was off to a strong start after economic data issued this morning showed the labor market was resilient, which assuaged concerns about the fallout of Britain's recent decision to quit the European Union.

The Labor Department's weekly data showed job losses slowed last week while ADP's private sector jobs report showed a more-than-expected increase in people hired last month. Traders want to see if the Labor Department's June nonfarm payroll, which is due on Friday, will show whether the poor May report was a one-off reading or a sign of a downturn in the labor market.

George Orwel can be reached at george.orwel@dtn.com