Oil Lower in Wednesday Trade
NEW YORK (DTN) -- New York Mercantile Exchange oil futures extended losses at the open of regular trade Wednesday morning ahead of weekly oil supply data by the Energy Information Administration, with products leading the futures complex lower amid bearish fundamentals and technical pressure.
Traders are also recalibrating their expectations for the EIA report that is set for release at 10:30 AM ET after the American Petroleum Institute late Tuesday reported U.S. crude oil and gasoline stocks unexpectedly increased during the week-ended April 21 while the decline in distillate fuel supplies was less-than-expected.
The API data showed crude oil inventories increased by 897,000 bbl, gasoline stockpiles rose by 4.45 million bbl and distillate supplies declined by 36,000 bbl. A survey showed the market expected stock draws of 2.3 million bbl for crude, 125,000 bbl for gasoline and 2.0 million bbl for distillates.
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"The API figures were clearly bearish, although there remains some chance that the more definitive EIA report may tell a somewhat different story," said analyst Tim Evans Citi Futures in New York.
U.S. total petroleum stocks were nearly 196 million bbl above their five-year average, with U.S. crude production 1.28 million bpd above their five-year average as of the week-ended April 14, EIA data showed last week.
The increase in U.S. crude oil production and building supply surplus have worked to undercut the Organization of Petroleum Exporting Countries' efforts to bring down global crude oil stocks in line with their five-year average.
Saudi oil minister Khalid al-Falih said last Thursday that six OPEC members agreed to extend production cuts beyond June, with Iran and Venezuela also supporting the plan. However, the market already has excess supply shipped to consumers in December before last year's supply agreement to cut production was put into effect in January, analysts said.
The oil futures market is also under technical pressure and analyst Walter Zimmermann at ICAP in Jersey City, N.J., has warned of further downside risk in his chart of the day report today.
"April is a dangerous time to be long on crude and gasoline because of the seasonal peaking window," said Zimmerman. "Everybody is bullish now because of OPEC cuts but how long will it take for OPEC to erase the supply glut? The longer it takes, the more likely the bulls will lose patience and selloff."
At 9:00 AM ET, June WTI crude futures fell 347cts to $49.09 bbl, off Tuesday's one-month spot low of $48.87. June Brent crude fell 54cts to $51.56 bbl, off Tuesday's one-month low at $51.30. The trans-Atlantic arbitrage is down 7cts to a $2.47 bbl Brent premium over WTI.
NYMEX May ULSD futures tumbled 1.33cts to $1.5319 gallon, off a fresh one-month low of $1.5281. NYMEX May RBOB futures dropped 2.41cts to $1.5989 gallon, off a $1.5934 fresh one-month spot low.
George Orwel can be reached at george.orwel@dtn.com
(CZ)
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