WTI Tumbles to a 4-Month Low

CRANBURY, N.J. (DTN) -- May West Texas Intermediate on the New York Mercantile Exchange tumbled to a nearly four-month low on the spot continuous chart in its debut as nearest delivery following a larger-than-expected build in commercial crude oil inventory on a jump in imports and another bump up in domestic crude production reported midmorning by the Energy Information Administration.

May Brent crude futures on the IntercontinentalExchange also dropped to a nearly four-month low on the spot continuous chart, punching below $50.00 bbl, with NYMEX April ULSD futures sliding to its lowest trade since Nov. 30, 2016 as well. NYMEX April RBOB futures were also down, with the gasoline contract accelerating to the downside after the EIA data.

EIA reported a 5.0 million bbl build in commercial crude oil inventory during the week-ended March 17 that was more than double market expectations, while in line with the 4.5 million bbl increase reported late Tuesday by the American Petroleum Institute. The supply build pushed up inventory to a fresh record high of 533.1 million bbl, 31.6 million bbl or 6.3% above year prior.

U.S. commercial crude oil supply has now increased in every week in 2017 with the exception of a modest 200,000 bbl draw in early March, with last week's inventory build due, in part, to a 902,000 bpd surge in imports to an 8.307 million bpd five-week high.

U.S. crude oil imports were expected to taper off following a throng of foreign oil shipments earlier in the year on a surge in crude production by the Organization of the Petroleum Exporting Countries and Russia during the fourth quarter 2016 ahead of a six-month production cut that took effect Jan. 1.

U.S. crude production edged up 20,000 bpd to a fresh better than one-year high of 9.129 million bpd to also pressure WTI futures. Domestic crude output has increased by 183,000 bpd so far in 2017 and 432,000 bpd since late November when OPEC reached their 1.2 million bpd production cut agreement followed by a 558,000 bpd pledge in cuts from Russia and 10 non-OPEC oil producers on Dec. 10.

Crude stocks at Cushing, Oklahoma, the delivery location for NYMEX WTI futures, increased a more-than-expected 1.5 million bbl to a 68.0 million bbl 10-month high, and the second highest inventory level at the important supply location on record. Cushing supply as of March 17 reached 88.2% of working capacity.

The build in commercial crude inventory also included a transfer of supply out of the Strategic Petroleum Reserve for the third consecutive week, with the SPR drawn down 600,000 bbl during the week under review after a roughly 1.1 million bbl decline during the two previous weeks.

In late morning trade, NYMEX May WTI futures were down 45cts near $47.80 bbl after trading at a $47.01 bbl nearly four-month low on the spot continuous chart. ICE May Brent crude futures were down 55cts near $50.40 bbl after slumping to a nearly four-month spot low of $49.71 bbl.

NYMEX April ULSD futures were down a little more than 1.0cts near $1.4930 gallon, paring a decline to a $1.4758 nearly four-month low on the spot continuous chart in the immediate reaction to the EIA data.

NYMEX April RBOB futures were down 0.75cts near $1.5980 gallon, trimming a decline to a $1.5835 two-day low.

EIA reported a larger-than-expected 2.8 million bbl draw from gasoline stocks during the week-ended March 17, although it was less than the API's reported 4.9 million bbl decline. EIA said distillate stocks decreased by 1.9 million bbl, which was in line with expectations and more than the 900,000 bbl draw API showed.

Product supplied dropped, with implied gasoline demand down 54,000 bpd to 9.2 million bpd while implied distillate demand tumbled 397,000 bpd to 4.012 million bpd.

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

(BAS)

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