Oil Higher in Midday Trade

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

CRANBURY, N.J. (DTN) -- Nearest delivered New York Mercantile Exchange oil futures moved higher following the midmorning release of weekly supply data from the Energy Information Administration that showed another large build in commercial crude inventory and a greater-than-expected drawdown in gasoline supply that pressed stocks to the lowest level of the year.

The supply data had more bullish than bearish dynamics, yet even with a 4.8 million barrel (bbl) drawdown in gasoline stocks that was well above market estimates and a 2.85 million bbl increase reported late Tuesday by the American Petroleum Institute, gasoline supply is 12.5 million bbl or 5.7% above year ago and the five-year average. At 229.3 million bbl, gasoline stocks are at their lowest point since late December 2017.

The steep draw came with another low rate of gasoline imports, which fell to 331,000 barrels per day (bpd) last week. The previous low was during the first week of 2018, with the United States exporting 969,000 bpd of gasoline last week.

Distillate stocks declined for a fifth straight week through Oct. 19, down 2.3 million bbl to a 130.4 million bbl two-month low. Distillate stocks are up 1.1 million bbl against year prior although have held below the five-year average since early March.

A 6.3 million bbl build in crude commercial crude stocks was again above estimates, and represented the fifth consecutive weekly increase that lifted stocks 28.7 million bbl from a three-year, seven-month low on Sept. 14 to a 422.8 million bbl four-month high. Cushing crude stocks also increased for a fifth week and to a 30.0 million bbl four-month high.

Adding to commercial supply was the third drawdown from the Strategic Petroleum Reserve against 11.0 million bbl of crude won during an auction completed in August, with SPR stocks down 1.2 million bbl last week. So far, 3.6 million bbl of SPR crude has been delivered, with the deliveries to run through early November. The SPR sales were authorized by Congress in previous years.

In late-morning trade, Nymex December West Texas Intermediate futures were up about $0.55 near $67.00 bbl, with November ULSD futures 0.85 cents higher near $2.2570 gallon, and the November RBOB contract up 1.15 cents near $1.8470 gallon.

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

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Brian Milne