CRANBURY, N.J. (DTN) -- Nearest delivered oil futures on the New York Mercantile Exchange were lower early Wednesday, extending late Tuesday's selloff as worry over demand growth joined concern over building U.S. oil supply to pressure the market.
The ongoing selloff was triggered by the largest decline in major U.S. equity indices since the election of President Donald Trump, with the Dow Jones Industrial Average tumbling more than 230 points and the S&P 500 Index dropping 29.45 points Tuesday. The selloff in equites was sparked by concern Trump's agenda would get bogged down by Republicans push for new healthcare legislation, delaying promised tax reform and other priorities by the president that were seen spurring economic growth.
Crude oil futures were leading the market lower, with nearest delivered Brent traded on the IntercontinentalExchange testing psychological support at $50.00 bbl with a trade at a $50.05 nearly fourth-month low, while May West Texas Intermediate on NYMEX rolled into the nearest delivered position after the April contract expired Tuesday at $47.34 bbl--the lowest settlement on the spot continuous chart since Nov. 29, 2016.
Oil futures were already under pressure on worry over growing U.S. oil supply, with domestic crude production in early March at a 9.109 million bpd better-than one-year high, according to the most recent data from the Energy Information Administration, while new rigs continue to be deployed in the United States. Commercial crude supply at 528.2 million bbl on March 10, just 200,000 bbl down from a record high, is 36.0 million bbl or 7.3% above the comparable year-ago period.
That concern was reinforced late Tuesday by the American Petroleum Institute, with the trade organization reporting a 4.5 million bbl build in U.S. crude supply during the week-ended March 17, more than twice expectations.
The EIA will publish its oil supply data for last week at 10:30 AM ET, with the market expecting oil products to have been drawn down 1.75 million bbl for both gasoline and distillates. Late Tuesday, API reported a 4.9 million bbl drawdown in gasoline supply for last week and a 900,000 bbl decline for distillates.
At 9:00 AM ET, May WTI futures were down 63cts at $47.61 bbl, with support at the $47.09 bbl March low. ICE May Brent futures were down 67cts at $50.29 bbl, with a break below $50.00 bbl setting up a test of support at $49.22 bbl.
NYMEX April RBOB futures were down a fractional 0.36cts at $1.6016 gallon, edging off a $1.5928 gallon two-day low, and holding well above support at the $1.5623 gallon March low. NYMEX April ULSD futures were 1.48cts lower at $1.4885 gallon, testing support at the $1.4784 March low overnight with a $1.4812 gallon print.
Brian Milne can be reached at firstname.lastname@example.org
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