Oil Mixed in Thursday Trade
NEW YORK (DTN) -- New York Mercantile Exchange (NYMEX) spot-month oil futures moved mixed Thursday morning, with West Texas Intermediate (WTI) , ULSD and Brent crude on the Intercontinental Exchange sliding to fresh multi-week lows overnight before paring the decline, as the market wrestles with building inventory and rising U.S. crude production.
On Wednesday, the Energy Information Administration (EIA) showed crude output soared 332,000 barrels per day (bpd) to a 10.251 million bpd record high last week, which is 1.273 million bpd above the comparable week a year ago. The previous record high was achieved in November 1970 at 10.044 million bpd. On Tuesday EIA projected in its monthly Short-term Energy Outlook (STEO) that U.S. crude production would average 10.6 million bpd this year and 11.2 million bpd in 2019.
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In its weekly statistics, EIA reported a 1.9 million barrel (bbl) crude stock build to 420.3 million bbl during the week ended Feb. 2, while supplies of gasoline and distillates up 3.4 million bbl and 3.9 million bbl, respectively.
Oil futures were also under pressure from recent strength in the U.S. dollar, which traded at two-week high versus rival currencies this week after sinking to a three-year low in late January. The dollar and WTI futures have an inverse relationship.
The weakness in oil futures this week follows rallies in January to three-year highs for WTI, Brent and ULSD, with the RBOB contract trading at its highest point since Hurricane Harvey slammed the Texas coastline in August 2017. Record high bullish positions in WTI futures by noncommercial traders exposed the market to this week's steep sell-off.
The drop in oil futures was further fanned by a sell-off in equities this week, with major indexes also trading at record highs in January. Expectations for rising inflation that might prompt the Federal Reserve to more aggressively increase the federal funds interest rate triggered this week's drop in equities that was sparked by sharp wage growth in January. The Dow Jones Industrial Average and S&P 500 Index opened lower Thursday.
At 9 a.m. ET, NYMEX March WTI crude futures were down 19 cents at $61.60 bbl after posting off a $61.08 fresh four-week spot low, with support at $57.08. April Brent crude oil on ICE fell 38 cents to $65.13 bbl, off a six-week spot low of $64.68, with support at $60.85.
NYMEX March ULSD futures eased 0.76 cents to $1.9237 gallon, moving off a $1.9126 six-week spot low. March RBOB futures nudged 0.30 cents higher at $1.7690 gallon after inside trade.
George Orwel can be reached at george.orwel@dtn.com
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