CRANBURY, N.J. (DTN) -- New York Mercantile Exchange nearest delivered oil futures and Intercontinental Exchange Brent crude notched gains on the session and the week. Brent settled at a fresh $71.87 five-month high, as production cuts, U.S. sanctions and enflamed violence in Libya reduce available supply, while oil demand climbs in the second quarter following the first quarter trough.
The gasoline contract had the largest weekly gain, rallying 6.83 cents or 3.5% from prior Friday following an unexpectedly large 7.7 million barrels (bbl) build that pressed supply below the five-average for the first time in 2019 at 229.1 million bbl. Gasoline supplied to market surged 676,000 barrels per day (bpd) to 9.806 million bpd, the highest weekly demand rate since the summer driving season in August. Days of forward supply declined to an 18-week low and below the five-year average at 24.5 days.
Nymex May RBOB futures consolidated for second consecutive session Friday after trading at a $2.0702 gallon six-month high midweek, ending up 0.61 cents at $2.0370 gallon. May ULSD futures settled up 0.35 cents at $2.0707 gallon on the session, holding just under a midweek $2.0897 five-month high on the spot continuation chart, and gained 2.83cts or 1.4% on the week.
Nymex May West Texas Intermediate futures held below Tuesday's five-month spot high of $64.79, settling the session up $0.31 and the week $0.81 at $63.89 bbl. ICE June Brent settled up $0.72 at $71.55 bbl and gained $1.21 or 1.7% from prior Friday.
Brent outpaced WTI this week following a second consecutive large build in U.S. commercial crude stocks while Libyan oil exports are seen threatened as a renegade general leads an assault on Tripoli, the North African country's capital where the United Nation's recognized government resides. The Organization of the Petroleum Exporting Countries reported Libyan crude production in March at a 1.098 million bpd five-month high.
U.S. commercial crude stocks jumped 7 million bbl last week and have increased 17.1 million bbl during the three-week period ended April 5 that pushed supply to 456.6 million bbl, a 17-month high. The large build in inventory coincides with constrained refiner crude inputs amid a rash of refinery outages, especially along the West Coast.
Stock building is also seen to have occurred on slowing export demand due to reduced transit through the Houston Ship Channel over the past few weeks amid cleanup efforts following the March 17 petrochemical tank farm fire at the Deer Park facility, fog and fierce storms. U.S. crude exports declined for three straight weeks through April 5 to a 2.349 million bpd 10-week low.
A narrowing WTI discount to Brent is also suggested as a factor in slowing the export rate. Brent's premium slid to a $6.63 bbl 7-1/2 month low on Tuesday. Brent's premium widened to a $7.66 bbl two-week high at Friday's settlement.
U.S. sanctions on Iran and Venezuela continue to take barrels off the market, as does OPEC+ production cuts. OPEC crude supply dropped 534,000 bpd to a more than four-year low at 30.022 million bpd in March, with 289,000 bpd of the decline from Venezuela. Iran crude production eased 28,000 bpd during the month to the lowest output rate since October 2013 at 2.698 million bpd. Iran, Venezuela and Libya are exempt from the OPEC+ production accord.
Brian Milne can be reached at Brian.Milne@dtn.com
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