Oil Reverses Down in Midday Trade

CRANBURY, N.J. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange reversed down following the release of weekly federal data showing commercial crude stocks increased 7.2 million barrels (bbl) in the United States in closing out the first quarter, with the U.S. data also pressuring the international Brent crude marker traded on the Intercontinental Exchange.

The build in commercial crude stocks reported midmorning by the Energy Information Administration contrasted with market estimates for a modest drawdown to have occurred during the week ended March 29, and more than doubled a 3 million bbl increase reported late Tuesday by the American Petroleum Institute.

The unexpected build pushed U.S. commercial crude stocks to a 449.5 million bbl four-week high, and widened a year-on-year surplus 11.9 million bbl or 2.8% to 24.2 million bbl or 5.7%.

The build was realized amid a 100,000 barrels per day (bpd) increase in U.S. crude production to a new record high of 12.2 million bpd during the week profiled, and a 386,000 bpd increase in the net crude import rate to 4.04 million bpd as exports declined for a second week.

Net crude refinery inputs were flat near a six-week low, up 18,000 bpd to 15.849 million bpd, while the run rate ticked down 0.2% to 86.4%, well below the comparable year-ago utilization rate of 93% and five-year average at 90.3%. The restrained run rate is partly due to a string of refinery outages along the West Coast, while Gulf Coast refiners are processing less crude than year ago. EIA data shows PADD 3 refiner crude inputs were down 616,000 bpd at 8.507 million bpd against year ago, as a partial closure of the Houston Ship Channel during the reporting week and a sharp decline in Venezuelan heavy crude imports to the region amid U.S. sanctions have prompted lower runs.

Gasoline supply declined an as expected 1.8 million bbl to 236.8 million bbl and distillate fuel a more-than-estimated 2 million bbl to 128.2 million bbl, both 14 week lows.

Product supplied to the U.S. market was down 132,000 bpd to 19.998 million bpd, narrowing the year-on-year growth rate in the first quarter by 111,000 bpd to 58,000 bpd at 20.732 million bpd. However, implied distillate demand again increased against year ago, up 153,000 bpd in the fourth quarter at 4.217 million bpd.

Near the noon hour in New York, Nymex May West Texas Intermediate futures were down $0.25 near $62.35 bbl, reversing from a $62.99 bbl five-month high on the spot continuous chart, and ICE June Brent was down $0.30 near $69.10 bbl after trading at a $69.96 bbl five-month spot high overnight. Nymex May RBOB futures were up a modest 0.7 cents at $1.9335 gallon and May ULSD futures slid 1.25 cents to near $1.9965 gallon.

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

(BAS)

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