Oil Futures Settle Lower on EIA Data

NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled at multi-week lows Wednesday as a stronger dollar and bearish gasoline data reported by the U.S. Energy Information Administration overshadowed fresh attempts by the Organization of the Petroleum Exporting Countries to jawbone prices higher.

EIA’s Weekly Petroleum Status Report covering the week-ended April 14 showed U.S. gasoline inventories rose for the first time in nine weeks, unexpectedly adding 1.5 million bbl of gasoline to stocks as demand for the fuel fell 52,000 bpd to 9.223 million bpd and imports surged.

U.S. gasoline demand is down 2.3% year-over-year and over the last four weeks demand for the fuel averaged over 9.3 million bpd, 0.7% below the same period last year. While domestic gasoline production fell 133,000 bpd, imports surged 355,000 bpd to an 843,000 bpd 4-1/2 month high.

Distillate fuel stockpiles fell 2.0 million bbl for the week to 148.3 million bbl despite increases in both domestic production and imports, as exports surged to a 1.419 million bpd record high.

“Gasoline output surprisingly fell even though crude runs were higher with refiners increasing distillate output... this is considered a bullish report but certainly with some bearish factors as well,” said analyst Kyle Cooper at IAF Advisors in Houston.

The increase in gasoline stockpiles came as refineries ramped up runs by 1.9% and crude oil inputs surged 241,000 bpd to 16.938, the second highest processing rate in 2017, and crude stockpiles were drawn down by a less-than-expected 1.0 million bbl to 532.3 million bbl, leaving supplies at roughly a 5% year-over-year surplus.

Moreover, domestic crude oil production rose 17,000 bpd to a 19-month high of 9.252 million bpd, 1.28 million bpd above five-year average that helped to neuter bullish comments issued earlier in the day by senior OPEC officials. And, according to EIA’s drilling productivity report issued on Monday, U.S. production is expected to climb again next month.

OPEC Secretary-General Mohammad Barkindo said during an oil industry conference in the United Arab Emirates that all oil producers taking part in the nearly 1.8 million bpd production cut agreement reached last year are committed to bringing global oil inventories down to their five-year average, an effort that would end the current global surplus.

Barkindo’s comments were echoed by UAE oil minister Suhail bin Mohammed Faraj Faris al-Mazrouei who urged for patience, saying there is healthy demand and global supplies would eventually come down as compliance with the agreement remains strong.

At settlement, May West Texas Intermediate crude futures fell $1.97 to $50.44 bbl, testing psychological support at $50 bbl ahead of Thursday’s expiration with a $50.09 two-week low. June WTI futures settled $2.00 lower at $50.85 bbl.

IntercontinentalExchange June Brent crude settled $1.96 to $52.93 bbl, edging off a $52.58 three-week spot low, with the trans-Atlantic arbitrage flat at a $2.49 bbl premium over WTI.

NYMEX May ULSD futures plunged 4.06cts to $1.5813 gallon, off a $1.5696 two-week, and NYMEX May RBOB futures settled 5.20cts lower at $1.6590 gallon, near a $1.6500 three-week spot low.

In currency trade, the dollar recovered after Tuesday’s losses that were triggered by a surprise announcement for elections in Britain on June 8.

George Orwel, 1.718.522.3969, george.orwel@dtn.com, www.schneider-electric.com. (c) 2017 Schneider Electric. All rights reserved.