WTI Pressed Lower by Stock Build

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled lower Wednesday amid a stronger U.S. dollar and Energy Information Administration data. The data showed higher crude oil supply and production during the week-ended March 23 with the downside limited by bullish products data.

"[P]roducts are very resilient because product inventories drew once again last week. We also had the third highest gasoline exports on record," said Houston-based analyst Andy Lipow.

EIA reported U.S. gasoline exports at 1.099 million bpd last week, with gasoline stocks drawn down 3.5 million bbl to 239.6 million bbl. Implied gasoline demand declined 116,000 bpd to 9.208 million bpd, but so far this year through March 23 have averaged 323,000 bpd or 3.7% more than a year ago.

"The report is supportive but also suggests a risk," said analyst Kyle Cooper at IAF Advisors. "Gasoline demand is still good, but also gasoline production is high, so we need exports to continue being strong to prevent the U.S. market from getting flooded with supply."

EIA said gasoline production surged 373,000 bpd to 10.305 million bpd last week.

Distillate supply declined 2.1 million bbl to 129.0 million bbl, the third consecutive week below the five-year average. Distillates demand spiked 458,000 bpd to a two-month high at 4.375 million bpd.

NYMEX April ULSD futures settled 0.76cts lower at $2.0148 gallon ahead of its expiration Thursday afternoon, settling at a nine point premium to the May contract. April RBOB futures settled down 19 points at $2.0116 gallon, with the May contract settling at a 0.76cts premium to the expiring April contract.

NYMEX May WTI crude settled down for the third straight session, down 87cts to a $64.38 bbl one-week low, after failing to take out resistance at $66.66 bbl this week. May WTI futures traded at a $66.55 two-month spot high on Monday.

The failure to crack resistance and the stronger dollar were joined by a 1.6 million bbl build in commercial crude oil stockpiles to 429.9 million bbl to pressure WTI futures Wednesday. EIA also reported domestic crude oil production accelerated to a 10.433 million bpd fresh record high last week, up 26,000 bpd on the week and 1.286 million bpd higher than a year ago.

May Brent crude on the Intercontinental Exchange fell 58cts to a $69.53 bbl settlement, edging off a $68.78 four-day low, with June contract settling at a 77cts discount to May delivery. The May contract expires Thursday afternoon.

George Orwel can be reached at george.orwel@dtn.com