NYMEX Oil Futures Up After EIA Data

Brian L Milne
By  Brian L. Milne , DTN Refined Fuels Editor

CRANBURY, N.J. (DTN) -- New York Mercantile Exchange oil futures nearest to delivery and Brent crude on the Intercontinental Exchange spiked to new highs late Wednesday morning. This comes following the midmorning release of mixed data from the Energy Information Administration, as an expected U.S. missile strike targeting assets of Syrian President Bashar Assad expands the geopolitical risk premium in oil prices.

EIA reported a 65,000 bpd increase in U.S. crude oil production to a fresh record high of 10.525 million bpd during the first week of April, with EIA on Tuesday forecasting domestic output to average 10.7 million bpd in 2018.

EIA also reported a 3.3 million bbl build in U.S. commercial crude oil inventory to 428.6 million bbl, although stocks held below the five-year average for a fourth consecutive week, moving below the average in mid-March for the first time since 2014.

Crude supply at Cushing, Oklahoma, the delivery location for the NYMEX West Texas Intermediate crude contract, increased for the fourth consecutive week through April 6, up 1.1 million bbl at a 36.0 million bbl two-month high. Crude stocks in the PADD 3 Gulf Coast region increased 2.7 million bbl to 223.5 million bbl following prior week's 7.0 million bbl draw. The American Petroleum Institute late Tuesday reported a 1.76 million bbl build in commercial U.S. stocks and a 1.45 million bbl increase at Cushing.

EIA reported a 500,000 bbl build to 238.9 million bbl in gasoline supply in the United States that was less than the API's reported 2.01 million bbl increase for the week reviewed, and a 1.0 million bbl drawdown in distillate stocks to a 128.4 million bbl nearly five-month low, although less that the API's reported 3.85 million bbl draw.

The EIA report seemed to serve as a lid on a boiling pot, which boiled over to new highs once the data was released as traders await developments in the U.S. response to the use of chemical weapons on April 7 on a rebel stronghold near the Syrian capital of Damascus that killed women and children.

U.S. President Donald Trump in an early morning tweet jabbed at Russian President Vladimir Putin over his support of Assad in the seven-year civil war, goading Russia for their vow to shoot down any missile strike in Syria.

"Get ready Russia, because they will be coming," said Trump in his tweet.

NYMEX May WTI futures surged to a $67.45 bbl three-year, four-month high on the spot continuation chart following the EIA data, up more than $1.50 near $67.00 bbl at 11:30 AM ET.

ICE June Brent crude traded at a new three-year, four-month spot high of $73.09 bbl, up about $1.50 near $72.50 bbl late morning.

NYMEX May RBOB futures jumped to a $2.0788 gallon seven-month spot high, with the previous high posted as Hurricane Harvey was roughing up the Texas coastline, while up 2.25cts near $2.0630 gallon late morning. NYMEX May ULSD futures spiked to a $2.1227 gallon better-than two-month spot high, trading 4.0cts higher near $2.1050 gallon late morning.

Sentiment was bullish heading into the second week of the second quarter, with money managers recently covering short positions. Stephen Schork with The Schork Report estimates speculators hold a ratio of 21 long contracts to each short contract in crude futures.

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

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Brian Milne