CRANBURY, N.J. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange reversed early losses in reaction to weekly supply data from the Energy Information Administration released midmorning, as inventory builds for crude and gasoline were less than expected and a draw in distillates more than anticipated while demand for oil products jumped to a seven-week high.
The gasoline contract led the morning advance, with March RBOB futures up about 2.4 cents at $1.4500 gallon ahead of the noon hour in New York, while March ULSD futures increased 1.5 cents to $1.9125 gallon. March West Texas Intermediate futures were $0.45 higher near $54.10 per barrel (bbl).
The weekly report was bullish for oil products, with total oil products implied demand surging 1.023 million barrels per day (bpd) to 21.838 million bpd during the week ended Feb. 1, up 995,000 bpd against year ago. Cumulatively, total oil products supplied to market has averaged 21.101 million bpd in early 2019, up 1.301 million bpd or 1.4% against the comparable year-ago period.
Implied gasoline demand did drop 491,000 bpd to 9.073 million bpd during the week profiled, albeit from a four-month high, yet so far in 2019 has averaged 118,000 bpd or 1.3% more than during the same period in 2018 at 8.99 million bpd.
Distillate fuel supplied to the primary market surged 551,000 bpd during the week profiled to a 4.673 million bpd seven-week high, with the previous high at 4.886 million bpd in mid-December the strongest demand for the fuel on a weekly basis since January 2003. In 2019 through Feb. 1, implied distillate demand is up 192,000 bpd or 4.6% against year prior.
EIA reported a 500,000 bbl build in gasoline supply and a 2.3 million bbl draw in distillates for the week profiled, which compared with market expectations ahead of Tuesday's American Petroleum Institute report for a gasoline build at about 1.3 million bbl and distillates draw of 2.0 million bbl. API late Tuesday reported gasoline stocks increased 1.731 million bbl, and distillates gained 1.141 million bbl.
Digging deeper into the data, a year-on-year surplus in gasoline supply declined for a second straight week to 12.4 million bbl or 5.1%, narrowing the variance by 3.2 million bbl since the week ended Jan. 18. Distillates stocks, now drawn down for a third straight week and inventory at the lowest inventory level of 2019 at 139.0 million bbl, flipped a year-on-year surplus of 3.4 million bbl or 3.4% in prior week to 2.8 million bbl or 2.0% decline as of Feb. 1.
U.S. exports for crude, gasoline and distillate fuel all increased, with total U.S. crude and products exports up 1.024 million bpd to 8.022 million bpd during the week profiled.
Commercial crude stocks built for a third consecutive week, and at 447.2 million bbl on Feb. 1 represent the highest inventory rate in 10 weeks. The 1.3 million bbl build in crude stocks was, however, less than expectations for a 1.5 million bbl increase, and below a 2.51 million bbl gain reported by API.
Brian L. Milne can be reached at firstname.lastname@example.org
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