CRANBURY, N.J. (DTN) -- Oil futures nearest delivery traded on the New York Mercantile Exchange pared an early session rally following the release of bearish weekly statistics from the Energy Information Administration, dropping back from better-than three-week highs.
EIA's midmorning report Wednesday showed a 1.7 million barrels (bbl) draw in U.S. commercial crude stocks for the week-ended Jan. 4 that was less than a 6.127 million bbl decline reported late Tuesday by the American Petroleum Institute. It was the second straight week in which the EIA and API datasets showed wide disparities in the weekly inventory change for commercial crude, with API last week reporting a 4.5 million bbl draw for the final full week of December and EIA holding supply flat.
A standout bearish data point was distillate fuel supplied to the primary market, which slumped a second straight week through Jan. 4, down 248,000 barrels per day (bpd) to a 2.955 million bpd three-year low. Week prior, implied distillate demand tumbled 1.039 million bpd, with the holidays clearly a factor in reducing demand. In the United States, diesel fuel is primarily consumed in the industrial and commercial sectors, with manufacturing plants typically closing for the Christmas holidays.
Although a smaller portion of the distillate fuel category, heating oil demand has also been under pressure amid mild winter weather in the U.S. Northeast.
Distillate fuel inventory increased 10.6 million bbl to 140.0 million bbl during the week-ended Jan. 4, which follows a 9.529 million bbl build during the previous week.
Gasoline inventories in the United States increased for a sixth straight week through Jan. 4, and reported the second straight week with a sizable build, up 8.1 million bbl last week after climbing 6.89 million bbl in the preceding week. Gasoline inventory at 248.1 million bbl as of Jan. 4 is up 10.7 million bbl or 4.5% against the comparable year-ago period.
EIA data showed imports of crude oil, gasoline, distillate and jet fuels all increased during the week profiled, and exports for crude and gasoline declined.
While oil futures moved off their session highs immediately following the midmorning release of the data on Wednesday, values are again floating higher, bolstered by optimism over U.S.-China trade negotiations in Beijing, which concluded earlier Wednesday. The initial two-day meeting between midlevel representatives extended into a third day, with both governments stating discussions were positive. Senior trade representatives will meet later this month.
Nymex February West Texas Intermediate futures were up $1.40 near $51.15 bbl after trading at a $51.50 better-than three spot week-high. February ULSD futures were up 2.0 cents near $1.8470 gallon, moving off a $1.8632 better-than three-week spot high. February RBOB futures were up 3.25 cents near $1.3950 gallon, slipping from a $1.4146 gallon better-than three-week spot high.
Brian Milne can be reached at firstname.lastname@example.org
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