Oil Futures Rally on Bullish EIA Data

NEW YORK (DTN) -- New York Mercantile Exchange crude oil and ultra-low sulfur diesel futures settled higher Wednesday afternoon after a bullish supply weekly supply report from the Energy Information Administration while RBOB futures gave back earlier gains to settle lower.

The EIA's Weekly Petroleum Status Report showed commercial crude oil stocks unexpectedly fell 3.0 million barrels (bbl) during the week-ended Sept. 30, marking a fifth straight weekly decline while imports fell 125,000 bpd.

The federal agency also reported distillate fuel supplies declined by a more-than-expected 2.4 million bbl while gasoline supplies unexpectedly increased 222,000 bbl for the week profiled.

Implied gasoline demand increased 510,000 barrels per day (bpd) last week to 9.39 million bpd, nearly 5% higher year-over-year. Implied demand for distillates rose 103,000 bpd to 3.875 million bpd, down 7.5% versus the same week a year ago.

NYMEX November WTI crude futures settled $1.14 higher at $49.83 per bbl, off a fresh three-month spot high of $49.97. ICE November Brent futures added 99 cents to $51.86 bbl at settlement, off a fresh four-month spot high of $52.09.

In products trade, NYMEX November ULSD futures rose 2.79 cents to $1.5823 gallon at settlement, off a $1.5923 fresh one-year spot high. NYMEX November RBOB futures settled 0.368 cent lower at $1.4928, reversing off a five-week spot high of $1.5163. The RBOB contract seesawed most of the session.

"Gasoline is down in part because the hurricane could do damage to demand side of the equation rather than supply," said analyst Phil Flynn at Price Futures. "There are no threats to refineries."

The Category 3 Hurricane Matthew is expected to strengthen and cause gyrations in supply and demand in the Southeast. The storm is expected to make landfall in Florida and South Carolina Thursday after battering Haiti and Cuba over the past two days. Evacuation is now underway from southeast Florida to North Carolina, with the storm expected to limit travel and curtain demand for gasoline in the region, said analysts.

The oil futures complex remains supported by last week's agreement by the Organization of Petroleum Exporting Countries to cut production, though specifics won't be announced until the group meets in late November.

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