Oil Reverses Gain in Midday Trade

CRANBURY, N.J. (DTN) -- Nearest delivered oil futures traded on the New York Mercantile Exchange advanced early Wednesday in the immediate reaction to data released by the Energy Information Administration midmorning, but quickly reversed the gains despite data showing a decline in total crude and oil products inventory and higher demand during the week ended June 16, with gasoline supplied to market during the week at the second highest peak on record.

In its midmorning data release, the EIA detailed a more-than-expected 2.5 million bbl draw in commercial crude oil inventory for the week ended June 16 that was on par with the American Petroleum Institute's reported 2.72 million bbl decline. At 509.1 million bbl, commercial crude supply is at a 4-1/2 month low.

A 600,000 bbl decline in gasoline supply was directionally in agreement with the market, and contrasted with a 346,000 bbl build reported by the API Tuesday. Distillate fuel supply increased a more-than-expected 1.1 million bbl, although bullish versus API's reported 1.84 million bbl build.

EIA reported gasoline supplied to market surged 546,000 bpd to 9.816 million bpd during the week reviewed that was just below the record high 9.822 million bpd reported during the week leading up to Memorial Day. During the two weeks in between however, implied gasoline was weak.

A 335,000 bpd jump in gasoline imports to a six-week high of 909,000 bpd and to the third highest weekly import rate of 2017 blunted a greater drawdown from inventory.

Total oil product supplied to market surged 1.553 million bpd to a nearly seven-month high at 21.067 million bpd was clearly bullish, although total commercial crude and oil product supply managed a modest 1.9 million bbl draw from a four-month high to 1.351 billion bbl.

In late morning trading, NYMEX August West Texas Intermediate crude futures were down fractionally near $43.40 bbl, with July ULSD futures roughly 0.5cts lower near $1.3890 gallon. NYMEX July RBOB futures were the holdout, up about 0.35cts near $1.4275 after reversing from a $1.4157 gallon one-week low overnight, and paring an initial advance to a $1.4450 intraday high.

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

(BAS)

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