CRANBURY, N.J. (DTN) -- New York Mercantile Exchange oil futures nearest to delivery and the spot-month Brent contract on the Intercontinental Exchange settled down a second straight day with the RBOB contract ending lower for a third consecutive session, although pared steeper losses incurred shortly after the release of supply data for the final week of August.
West Texas Intermediate, Brent and ULSD futures all swung to two-week lows and the RBOB contract to a 5-1/2 month low following the Energy Information Administration's supply report that showed builds in domestic product inventories amid slowing demand, a jump in imports and steep decline in exports for the week-ended Aug. 31.
Total U.S. crude and products exports tumbled 1.057 million barrels per day (bpd) to 5.569 million bpd nearly one-year low.
Implied demand for gasoline and distillates did compare positively to year ago, when Hurricane Harvey was ripping through Houston.
The bearish data on products contrasted with a larger-than-expected drawdown from commercial crude inventory, which fell 4.3 million barrels (bbl) to a 401.5-million-bbl 3-1/2-year low. The supply draw was realized as U.S. refiners continue strong runs at their refineries, with refiner net crude inputs averaging 17.647 million bpd for the profiled period, the seventh highest weekly input rate in 2018. The U.S. refinery rate increased 0.3% to 96.6% against expectations for a 0.4% decline.
The products data won out, as seasonal refinery maintenance is set to begin this month, reducing refiner demand for crude.
Separately, the U.S. economy continues to grow, the latest data on employment and services show, which follows early week data on manufacturing.
The U.S. Institute of Supply Management's non-manufacturing index increased sharply in August, from 55.7 in July to 58.5, and well above a market consensus of 56.8, on strength from new orders and backlog orders including a big jump in new export orders.
Similar to Tuesday's results when the U.S. ISM manufacturing index contrasted with an expected decline and instead surged while the purchasing managers' manufacturing index eased, the PMI services index fell from 56.0 in July to 54.8 in August. The readings show expansion, but the PMI data is highlighting a slowdown in that growth.
This morning, ADP payroll services reported U.S. private sector employment increased a less-than-expected 163,000 in August, with consensus at 182,000. The ADP report previews the Department of Labor's nonfarm employment report due for release Friday morning, with the market anticipating 195,000 jobs were created in August. The national jobless rate is seen down 0.1% to 3.8% in August that would match May's reading, the lowest since April 2000.
The data suggests demand for transportation fuels remain underpinned by a strong economy and ongoing employment growth.
NYMEX October RBOB futures stumbled to a $1.9260 5-1/2 month low on the spot continuation chart before cutting the loss with a $1.9510 gallon settlement, down 1.38 cents. NYMEX October ULSD futures tested support with a $2.1910 gallon two-week spot low, settling down 2.54 cents at $2.2091 gallon.
NYMEX October WTI futures settled $0.95 lower at $67.77 bbl, edging off a $67.00-per-bbl two-week low. ICE November Brent crude futures ended Thursday's trade down $0.77 at $76.50 bbl, paring a decline to a $75.64 two-week spot low.
Brian L. Milne can be reached at firstname.lastname@example.org
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