Oil Futures End Mixed

OLD BRIDGE, N.J. (DTN) -- Oil futures nearest to delivery traded on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled mixed Thursday, as West Texas Intermediate crude made a fresh multiyear high following Wednesday's bullish supply report, while Brent crude and ULSD edged up, although off four-week highs, and the RBOB contract reversed down.

On Wednesday, the Energy Information Administration showed strong demand for U.S. crude both domestically and by international buyers, with a 0.8% jump in the refinery run rate to 97.5%, the highest since July 2005, having a bearish effect on products.

EIA reported a steep 9.9-million-barrel (bbl) draw in U.S. commercial crude stocks, the third straight weekly decline, with inventory down 20.0 million bbl or 4.6% in June to a 416.6 million bbl five-month low. Days of forward crude supply at 23.7 are at a 3-1/2 year low.

EIA also showed U.S. refinery crude inputs at a record-high 17.816 million barrels per day (bpd), while exports also surged to a record at 3.0 million bpd, with the jump in U.S. exports following a wide WTI discount to Brent which has since narrowed. Brent's premium reached a better than three-year high at $11.37 bbl in early June, and since shrunk to a $4.40 at settlement, near Wednesday's $4.34 bbl three-month low.

At settlement, NYMEX August WTI futures contract stood 69 cents per bbl higher at $73.45, while the September contract was up 55 cents at $71.81 bbl. ICE August Brent, which expires at Friday's close, settled up 23 cents to $77.85 bbl, while the September contract was 15 cents higher at $77.61 bbl.

News that Saudi Arabia would boost July output by 11.0 million bpd weighed on Brent prices, with the expected increase following the recent meetings by the Organization of the Petroleum Exporting Countries and non-OPEC producers including Russia when they pledged to boost production by roughly 1.0 million bpd effective July 1. In May, the Saudis reported crude production at 10.03 million bpd.

The pledged increases, which bring OPEC and non-OPEC into compliance, comes amid an array of supply disruptions among OPEC members, namely Venezuela, where output is freefalling amid the country's economic collapse, and more recently Libya, where rival militant groups vie for control of the country. The pledged increase also comes amid concern over the effect of U.S. imposed sanctions on Iranian crude exports, with recent reports indicating exports have dropped off from 2.7 million bpd in May to 2.2 million bpd this month.

Supply disruptions also span to North America, where an upgrader outage in Alberta has shut-in Syncrude production by 360,000 bpd since June 20. The outage is expected to last through July, potentially prompting additional drawdowns at the Cushing supply depot in Oklahoma, the delivery location for the WTI contract. Cushing stocks have been drawn down for six consecutive weeks to a 29.9 million bbl three-month low.

The high refinery run rate, while drawing down crude stocks are also prompting builds in oil products inventories. EIA reported a third consecutive increase in gasoline inventory to a 241.2 million bbl three-month high, even as implied demand shot up 406,000 bpd to 9.731 million bpd.

Building gasoline stocks weighed on NYMEX RBOB futures despite the upcoming July 4th holiday, with holiday driving demand expected at a record, according to AAA.

The July RBOB contract, which expires at Friday's close, settled marginally lower at $2.1339 gallon, while August RBOB futures ended slightly lower at $2.1055 gallon.

The July ULSD contract settled 10 points higher at $2.1782 gallon in front of its expiration at Friday's close, while August futures was near flat with a $2.1790 gallon settlement.

Brian Whary can be reached at brian.whary@dtn.com