Oil Mixed After EIA Data

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

CRANBURY, N.J. (DTN) -- New York Mercantile Exchange oil futures and Brent crude on the Intercontinental Exchange were mixed after initially moving lower in reaction to weekly supply data released midmorning by the Energy Information Administration that showed inventory builds for crude oil and gasoline and a steep decline in implied demand.

EIA reported a 2.2 million bbl crude build to a 429.7 million bbl four-week high during the week-ended April 20, with the supply increase coming with a 1.6% drop in the U.S. refinery run rate to a 90.8% six-week low amid ongoing seasonal maintenance. U.S. refiners processed 328,000 bpd less crude during the week reviewed while imports surged 539,000 bpd to 8.469 million bpd.

U.S. crude production increased 48,000 bpd last week to a fresh record high at 10.586 million bpd, while U.S. crude exports surged 582,000 bpd to a record high at 2.331 million bpd.

Climbing U.S. crude production coincides with increased deployment of oil rigs and expanding hedging programs by commercial interests, while U.S. crude exports continue to grow as production cuts by the Organization of the Petroleum Exporting Countries and 10 non-OPEC oil producing countries cede market share to U.S. oil producers. Brent's premium to West Texas Intermediate futures settled at a $6.16 bbl 3-1/2 month high Tuesday, with the widening spread an incentive for foreign buyers of U.S. crude oil.

EIA reported a 500,000 bbl build in Cushing oil supply, with the Oklahoma tank farm the delivery location for NYMEX WTI futures. EIA data differed with statistics released Tuesday afternoon by the American Petroleum Institute that showed a smaller 1.1 million bbl build in U.S. crude storage and a 930,000 bpd draw at Cushing. Gasoline supply increased 800,000 bbl to 236.8 million bbl that contrasted with an API-reported 2.724 million bbl drawdown for the week reviewed, with NYMEX RBOB futures leading the decline by oil futures amid the dramatic shift in estimates.

The gasoline build was driven primarily by a 774,000 bpd plunge in implied demand from an all-time weekly high to a 9.083 million bpd two-month low. The large weekly changes over the past couple of weeks suggests data smoothing.

Distillate supply was drawn down 2.6 million bbl to a 122.7 million bbl three-year four-month low during the week reviewed, which compares with API data showing distillate stocks declined by 1.911 million bbl. Total U.S. oil products supplied to market plunged 2.434 million bpd to a 19.0 million bpd 14-month low during the week, although total U.S. crude and oil products exports spiked 1.607 million bpd to an 8.332 million bpd record high. The extremes in the weekly changes in the data points adds to the suggestion that EIA data points were rationalized. Late morning, NYMEX June WTI futures were slightly higher near $67.75 bbl, with ICE June Brent crude down 25cts near $73.60 bbl. NYMEX May RBOB futures were 1.55cts lower at $2.0794 gallon, with the May ULSD contract flat near $2.1275 gallon.

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

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Brian Milne