Oil Futures Down Ahead of EIA Data

Brian L Milne
By  Brian L. Milne , DTN Refined Fuels Editor

CRANBURY, N.J. (DTN) -- Nearest delivered oil futures traded on the New York Mercantile Exchange and Brent crude on the IntercontinentalExchange were lower in early trade Wednesday, consolidating at the low end of Tuesday's trading range following the release of mixed supply data late Tuesday afternoon and ahead of the Energy Information Administration's weekly supply report.

Late Tuesday after the session's formal close, the American Petroleum Institute released oil supply data for the week-ended June 2 that was bullish for crude but bearish for oil products, with the trade organization reporting the ninth consecutive weekly drawdown in domestic commercial crude stocks.

API said U.S. commercial crude oil inventory was drawn down 4.6 million barrels (bbl) last week that was more than an expected 3.0 million bbl decline, with the data supporting analysts' comments earlier in the second quarter that the drawdowns in U.S. commercial crude inventory would accelerate following spring's refinery turnaround season and during peak gasoline demand in the summer months. EIA shows domestic commercial crude oil inventory has been drawn down 25.6 million bbl in the second quarter through May 26, with the API finding putting the figure at 30.2 million bbl through June 2 if confirmed by EIA.

The disappearance in crude stocks appeared in oil products however, with API reporting a 4.1 million bbl build in gasoline stocks that was well above market expectations for a 500,000 bbl increase, and a 1.8 million bbl gain in distillate fuel stocks versus an anticipated 1.0 million bbl addition.

EIA will publish its weekly supply report at 10:30 AM ET.

Despite Tuesday's modest advance, oil futures remain in a short-term downtrend, holding above technical support, while the market focuses on a prolonged supply glut.

At 9:00 a.m. EDT, NYMEX July RBOB futures were down 2.05 cents at $1.5340 gallon, holding above Tuesday's $1.5220 gallon one-month low on the spot continuous chart. NYMEX July ULSD futures were down 0.83 cent at $1.4579 gallon after trading at a $1.4416 one-month low on the spot continuous chart Tuesday.

NYMEX July West Texas Intermediate crude futures were 47 cents lower at $47.72 bbl, in range to test Friday's better than three-week spot low of $46.74 bbl.

August Brent crude futures on ICE were down 48 cents at $49.64 bbl, holding above Friday's $48.95 better-than three-week low on the spot continuous chart.

On Tuesday, EIA released its Short-term Energy Outlook, forecasting a $53 bbl average for Brent crude this year and $56 bbl in 2018, with WTI projected at a $2 bbl discount to Brent. So far this year through Tuesday's close, Brent crude has averaged $53.61 bbl and WTI $50.85 bbl.

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

(BAS)

Brian Milne