WASHINGTON, D.C. (DTN) -- New York Mercantile Exchange nearest delivered oil futures and Brent crude on the Intercontinental Exchange posted losses in early trading Thursday after government data showed across-the-board inventory builds that fueled concern over demand just ahead of the unofficial start to the U.S. driving season this Memorial Day weekend.
Near 9 a.m. ET, July Nymex West Texas Intermediate crude oil futures shed $1.46 to $59.96 per barrel (bbl) while the July ICE Brent contract dropped $1.46 to $69.53 bbl.
Nymex June RBOB futures tumbled 3.4 cents to $1.9572 gallon and June ULSD futures slid 3.51 cents to $2.0140 gallon.
Energy Information Administration said on Wednesday commercial crude oil inventories in the United States jumped 4.7 million bbl during the week-ended May 17, lifting stocks to the highest level since July 2017. The build countered market expectation of a 2 million bbl draw and was realized as domestic crude oil production reversed higher, while refinery runs moved down ahead of the driving season.
Domestic crude production increased 100,000 barrels per day (bpd) to 12.2 million bpd, holding just below record output at 12.3 million bpd in April.
EIA data on oil products was also bearish, with gasoline inventories narrowing a decline against year-ago levels while distillate stocks widened a year-on-year surplus.
EIA reported an unexpected 3.7 million bbl build in gasoline inventories to 228.7 million bbl that reduced a year-on-year deficit by 1.8 million bbl to 5.2 million bbl or 2.2%. An 800,000 bbl distillate stock increase countered expectations for a draw, and at 126.4 million bbl boosted stocks to 12.4 million bbl or 10.9% above the comparable year-ago period.
The inventory gains are realized as the Organization of Economic Cooperation and Development cut its global growth forecast by 0.1% to 3.3% for 2019, as trade flows nearly halved this year to only 2.1%, according to their biannual Economic Outlook -- the slowest pace for global economic growth since 2016. The revision points to tariff increases by the United States and China.
Economic growth in China and the United States could be 0.2% to 0.3% lower on average by 2021 and 2022 if the two countries do not pullback on tit-for-tat tariffs in their dispute that has dampened the global economic outlook, the OECD said this week.
The prospect of a long-term tariff fight between China and the United States also pressured oil futures prices. No further talks between top officials have been scheduled since the last round ended in a stalemate on May 10.
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