NYMEX Oil Futures End Mixed

NEW YORK (DTN) -- New York Mercantile Exchange oil futures ended mixed with a downside bias Wednesday afternoon, with West Texas Intermediate falling sharply on the back of a bearish report showing an unexpected build in crude stocks while demand for crude and gasoline fell during the week-ended Aug. 19 in the United States.

WTI futures were also pressured by a stronger dollar as investors priced in a hike in federal funds rate in the coming months, although the September RBOB futures contract shook off early weakness and eked out a moderate gain at the closing bell this afternoon.

"The market was disappointed both gasoline demand and refinery runs fell, but September RBOB is up because of active buying in the Gulf Coast cash market ahead of the Atlantic storm coming next week," said analyst Phil Flynn at Price Futures Group in Chicago.

The Energy Information Administration reported crude inventories surged 2.5 million bbl to 523.6 million bbl, which is high for this time of year and up 16.1% year-over-year. The market expected a 2.3 million bbl stock draw.

At the Cushing supply hub in Oklahoma, crude supplies climbed 400,000 bbl to 64.9 million bbl, EIA data shows, versus calls for a decline of 700,000 bbl.

The report also showed crude imports rose 449,000 bpd to 8.6 million bpd for the week as refinery inputs, a proxy for demand, declined 186,000 bpd to 16.7 million bpd and refinery run rates fell 1.0% to 92.5%.

NYMEX October WTI crude futures settled $1.33 or 2.7% lower at $46.77 bbl, and October Brent on the IntercontinentalExchange settled 91cts lower at $49.05 bbl after inside trade.

In products trade, NYMEX September ULSD futures eased 0.55cts to $1.4963 gallon at settlement and September RBOB futures traded 1.08cts higher to a $1.5096 gallon settlement, pairing gains after posting a seven-week high of $1.5233 on the spot continuation chart.

EIA data showed gasoline inventories inching up 36,016 bbl to 232.7 million bbl last week to remain well above the upper limit of the average range, versus an expected 1.7 million bbl draw. Demand for the fuel fell 103,000 bpd last week to 9.659 million bpd, but is up 5.1% year-over-year.

Distillate fuel inventories gained 122,016 bbl to 153.3 million bbl, a 2.3% year-over-year surplus, with implied demand up 302,000 bpd to 3.790 million bpd last week, 5.2% higher than the same week in 2015.

Despite the weakness for crude futures, oil speculators are still looking to see if the Organization of Petroleum Exporting Countries will act to reign in oil production next month. The Wall Street Journal reported today Iran has told OPEC that it will attend the Sept. 26-28 meeting in Algeria, signaling it might support a production freeze.

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