Oil Futures Settle Mixed
NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled mixed Wednesday afternoon, with the West Texas Intermediate crude oil and RBOB contracts posting modest gains while ULSD futures reversed to end a tad lower after trading at a four-day high.
The market rallied overnight through early morning trade after both the American Petroleum Institute and the Energy Information Administration reported bigger-than-expected stock draws for domestic crude inventory for the week ended July 7.
However, the oil market came under pressure as the market returned focus to oversupply, with the Organization of the Petroleum Exporting Countries this morning reporting its crude oil production increased in June while forecasting slightly lower world demand next year. In addition, the EIA's weekly oil report was bullish on inventories but bearish on crude production, which rose for the second straight week to a fresh two-year high.
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The NYMEX August WTI crude futures contract settled up 45cts at $45.49 bbl, cutting an advance to a $46.48 four-day high. The IntercontinentalExchange September Brent crude futures contract settled 22cts higher at $47.74 bbl, moving off a four-day high of $48.79. The Brent premium to WTI narrowed 23cts on the session to a $2.25 one-week low.
In products trade, August ULSD futures slipped 0.26cts to a $1.4737 gallon settlement, reversing from a $1.5053 four-day high. August RBOB futures eked out a 0.25cts gain to a $1.5208 gallon settlement after rallying to a $1.5485 five-week spot high.
EIA's oil report for the first week of July showed total U.S. petroleum stockpiles fell more than 7.0 million bbl even as total products implied demand dropped from a record high. Gasoline demand increased 81,000 bpd on the week although distillate demand plummeted 464,000 bpd.
The report detailed a 7.6 million bbl draw for crude oil stockpiles to a total of 495.3 million bbl, the lowest level since the final week of January, though up 1% year-over-year. It further reported a 1.6 million bbl draw for gasoline supply while distillate fuel supply increased by 3.1 million bbl.
The most bearish part of the EIA report was on domestic crude production, which increased 59,000 bpd to 9.397 million bpd on the week and to the highest output rate since July 31, 2015.
"The details [of the report] are considered much less bullish than the headlines," said Houston-based oil analyst Kyle Cooper at IAF Advisors.
In its Monthly Oil Market Report for July, OPEC maintained its estimate for 2017 global oil demand growth at 1.27 million bpd to 96.4 million bpd. However, the report forecast slightly lower growth in world oil demand for 2018, projecting a 1.26 million bpd growth rate to 97.6 million bpd. The report also said OPEC crude production rose by 393,500 bpd in June to average 32.61 million bpd, according to secondary sources.
George Orwel can be reached at George.orwel@dtn.com,
(CZ)
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