NEW YORK (DTN) -- New York Mercantile Exchange oil futures advanced again Wednesday morning with West Texas Intermediate crude and Brent crude futures on the Intercontinental Exchange trading at fresh three-year and 2-1/2 year highs, respectively, ahead of a weekly oil report by the Energy Information Administration due out at 10:30 AM ET that's expected to show the eighth consecutive weekly crude stock draw in the United States.
On Tuesday, the American Petroleum Institute reported a massive stock drawdown in U.S. crude oil during the first week of 2018. The industry group said crude inventories declined during the week-ended Jan. 5 by 11.2 million bbl, which is more than twice a draw of 4.75 million bbl the market was expecting. Crude stocks at the Cushing delivery point for WTI futures in Oklahoma fell 2.5 million bbl, surpassing an estimated 2.0 million bbl, said API.
The crude stock draw was accompanied by a 1.2% increase in refinery runs to 97.4% of operable capacity, said API. Refinery runs have remained high in the United States, driving strong demand for crude, and explains in large part the recent large supply builds for refined oil products. API showed gasoline and distillate fuel stocks posted increases of 4.3 million bbl and 4.7 million bbl, respectively, last week.
Globally, the EIA said Tuesday in its Short-term Energy Outlook report for January that strong economic growth in the United States supports greater oil demand. The agency projects global oil demand would increase at an annual rate of 1.72 million bpd to 100.11 million bpd in 2018, up from a growth rate of 1.44 million bpd to 98.39 million bpd in 2017. For 2019, global demand is forecast to increase year-on-year by 1.65 million bpd to 101.76 million bpd.
At 9:00 AM ET, NYMEX February WTI futures gained 45cts to $63.41 bbl, the highest level since early Dec. 8, 2014, trading above resistance at $63.30, with long-term resistance marked at $70.44. March Brent crude oil futures on ICE climbed 31cts to $69.13 bbl, off a fresh 31-month spot high of $69.37, with long-term resistance at $77.75. WTI and Brent are in backwardation, which is a bullish market structure.
NYMEX February ULSD futures were 1.22cts higher at $2.0784 gallon, off a four-day high of $2.0844, with initial resistance at the $2.0906 three-year spot high traded during the first session of 2018. February RBOB futures edged up 0.59cts to $1.8421 gallon, off a $1.8513 fresh four-month, one-week high on the spot continuous chart.
George Orwel can be reached at email@example.com
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