Oil Futures Tumble in Thursday Trade
WASHINGTON, D.C. (DTN) -- Nearest delivered New York Mercantile Exchange oil futures and Brent crude on the Intercontinental Exchange moved lower in early trading Thursday on a larger-than-expected build in U.S. crude inventories, while production climbed to a record high in the last week of April, according to government data.
Near 9 a.m. ET, Nymex June West Texas Intermediate futures were down $1.15 at $62.45 per barrel (bbl), with ICE July Brent $1.10 lower near $71.10 bbl. Nymex June ULSD futures slid 1.35 cents to near $2.0805, with June RBOB 3 cents lower near $2.0304 gallon.
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U.S. crude inventories jumped a steep 9.9 million bbl last week, surging to the highest level in nearly two years, according to Wednesday's Energy Information Administration's supply report. Gasoline stocks also increased 900,000 bbl against market expectations for a 1 million bbl draw, while distillate stockpiles were drawn down 1.3 million bbl, although demand for distillates slipped against a year ago. Steep fluctuations in U.S. inventories came amid record domestic production of 12.3 million barrels per day (bpd) during the last week of April, government data showed.
In contrast with surging U.S. production, Organization of the Petroleum Exporting Countries' output reached a four-year low in April, driven by involuntarily losses from Venezuela and Iran, and production restraints amid the OPEC deal. A Reuters' survey showed the 14-member group of oil producers pumped 30.23 million bpd last month, with Saudi Arabia and Gulf allies maintaining larger supply cuts than previously agreed to in the Vienna accord. Russia's oil production also fell to 11.23 million bpd from 11.3 bod in March, edging closer to its OPEC quota in the profiled month. In April, OPEC agreement achieved 132% compliance with pledged cuts compared to 145% in March due to higher output in Nigeria and Iraq.
In economic news, Federal Reserve announced Wednesday the federal funds rate will remain unchanged at 2.5%, while again pointing to a careful approach before resuming monetary tightening amid low inflation. In light of global economic and financial developments and muted inflation pressures, officials will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes, read the Federal Open Market Committee statement released on Wednesday.
Central bank officials said since their previous meeting in March, the labor market remains strong and economic activity robust.
Liubov Georges can be reached at liubov.georges@dtn.com
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