Oil Lower in Wednesday Trade
NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures tumbled to fresh lows Wednesday morning ahead of U.S. data that are expected to show U.S. petroleum inventories were drawn down during the week leading up to the Memorial Day holiday.
The American Petroleum Institute is set to issue its oil supply data for the week-ended May 26 later this afternoon, with the U.S. Energy Information Administration releasing its weekly data at 11:00 AM ET Thursday.
The futures decline is underpinned by disappointment with the tepid action by the Organization of the Petroleum Exporting Countries and several non-OPEC producers, which the market thinks won't be enough to reduce global oil surplus given the higher production in the United States and Libya.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
OPEC and their 10 non-OPEC producing partners extended production cuts of nearly 1.8 million bpd through March 2018, but without deeper cuts as the market expected. A percentage of the output cuts are expected to be replaced by incremental barrels from Libya and the United States over the coming months.
Libyan crude production is at a 2-1/2 year high of nearly 800,000 bpd, while U.S. output is at a 21-month high of 9.32 million bpd as of May 19. As a result, the market is sentimentally bearish, with technical pressure also underpinning the fresh selloff.
At last look, NYMEX July West Texas Intermediate crude futures dropped $1.29 to $48.37 bbl, trading close to a $48.13 two-week low on the spot continuation chart. Initial technical support is pinned at $47.88 and then at $46.91.
July Brent crude oil futures on the IntercontinentalExchange tumbled $1.53 to $50.31 bbl, near a three-week low of $50.13 ahead of expiration this afternoon, with August Brent down $1.41 at $50.83 bbl. Spot-month Brent crude is challenging support at $49.71, while its premium to WTI fell to a three-month low at $1.94 bbl.
NYMEX June ULSD futures declined 3.47cts to $1.5147 gallon, moving off a $1.5125 better than one-week low, and the July contract was down 3.40cts to $1.5195 gallon. The spot-month contract now targets $1.5009 support.
NYMEX June RBOB futures plunged 3.74cts to $1.6015 gallon, moving near a three-day low of $1.6004, ahead of its expiration today, while the July contract was down 3.75cts to $1.5868. The spot-month contract is testing support at $1.5973.
George Orwel can be reached at george.orwel@dtn.com
(BAS)
Copyright 2017 DTN/The Progressive Farmer. All rights reserved.