Oil Futures End Lower

WASHINGTON, D.C. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange eased Wednesday, weighed down by another selloff in equities after China signaled the potential for an extended trade disruption, but pared steeper losses on news a crude pipeline at Cushing, Oklahoma, would restart Thursday after being forced shut by flooding.

NYMEX July West Texas Intermediate futures finished the session down $0.33 at $58.81 bbl, erasing a drop to a $56.88 2-1/2 month low on the spot continuous chart. ICE July Brent slid $0.66 to a $69.45 bbl settlement, with the August contract ending $0.80 lower at $67.87 bbl. NYMEX June RBOB futures settled down 1.15cts at $1.9452 gallon, with the July contract widening its discount to nearest delivery with a $1.9202 settlement. NYMEX June ULSD futures lost 2.5cts with a $1.9675 gallon settlement, with the July contract ending at an 18-point premium to June delivery.

Domestically, weather-related pipeline outages and refinery shutdowns continue to inject a heavy dose of volatility in futures markets. News from Reuters MPLX LP would restart the 360,000 bpd Ozark Pipeline early Thursday and operate at full rates prompted a recovery in WTI futures. The Ozark Pipeline carries crude from the Cushing storage facility to Wood River, Illinois. The shutdown raised the prospect of bottling up crude supply at the storage center.

Globally, U.S.-China trade tensions continued to amplify on Wednesday, sending shockwaves through the bond and equity markets that quickly spilled over into commodities. According to the state-run Chinese newspaper, Beijing is prepared to limit supplies of rare-earth materials to the United States, which are widely used for production of smartphones and electronics. Bloomberg reported the United States sourced nearly 80% of its rare-earth materials from China in the last four years.

"We advise the United States not to underestimate the Chinese side's ability to safeguard its development rights and interests", the newspaper added. "Don't say we didn't warn you!"

U.S. President Donald Trump showed no signs of backing down earlier this week, stating the United States is not ready to make a trade deal with China.

Major stock indexes widened losses on Wednesday, as the dimming likelihood of an imminent trade deal spurred investors to flee the riskier assets for government bonds. The yield on the benchmark 10-year U.S. Treasury note settled on Wednesday at 20-month low, falling below the yield on the 3-month Treasury bill. Dow Jones Industrial Average fell 221.36 points Wednesday, a sixth consecutive week of declines, the longest string of weekly losses since June 2011.

Liubov Georges can be reached at liubov.georges@dtn.com

(BAS)