CRANBURY, N.J. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange swung to fresh and new multi-month lows in response to another week of bearish weekly supply data showing across-the-board builds in commercial inventory held in the United States and higher domestic crude production.
In late morning trading, NYMEX July West Texas Intermediate futures were down $2.10 to about $51.45 per barrel (bbl) trading near a $51.21 bbl better-than four-month low on the spot continuous chart. ICE August Brent futures dropped back $1.65 to near $60.30 bbl, trading near a fresh four-month spot low of $60.10 bbl.
NYMEX July RBOB futures were 4.35 cents lower near $1.6810 gallon, edging off a fresh better-than three-month spot low of $1.6691 gallon. July ULSD futures were trading near a $1.7573 gallon five-month low on the spot continuous chart at $1.7585 gallon, down 6.3 cents.
U.S. crude production ramped up 100,000 barrels per day (bpd) to a fresh record high of 12.4 million bpd during the week ended on May 31, with domestic output averaging 12.25 million barrels per day (bpd) in May, 1.5 million bpd or 13.9% above the comparable period a year ago, according to the Energy Information Administration's supply report for the week ended on May 31.
EIA reported a 6.8 million bbl build in commercial crude stocks that lifted inventory to a 483.3 million bbl more than 22-month high. Crude stocks have jumped 33.8 million bbl or 7.5% in the second quarter, with a year-on-year supply overhang widening 4.7 million bbl from week prior to 46.7 million bbl or 10.7%.
Crude oil stored at Cushing, Oklahoma, the delivery location for NYMEX WTI futures, increased 1.7 million bbl to 50.8 million bbl, the first time Cushing oil stocks have topped 50 million bbl since December 2017, while moving above the five-year average at 48.78 million bbl.
U.S. refiners processed 171,000 bpd more crude during the week profiled at 16.938 million bpd, but again trailed the year-ago input rate. U.S. refiner crude inputs averaged 16.74 million bpd in May, down 207,000 bpd or 1.2% against year ago. At 91.8%, the U.S. refinery run rate is below the 95.4% utilization rate a year ago and the five-year average at 92.7%.
Data for gasoline and distillate fuel was also bearish, with EIA showing a much larger-than-expected 3.2 million bbl build in gasoline stocks to lift supply to 234.1 million bbl. Gasoline inventory increased 9.1 million bbl from May 11 to May 31. A high level of gasoline imports, which topped 1 million bpd for the fourth week out of the past five, was a key factor in the gasoline build. The net gasoline import rate was 416,000 bpd during the week profiled, and has averaged 462,000 bpd during the most recent five weeks.
Distillate inventory gained 4.6 million bbl or 3.7% during the week-ended May 31, 12.6 million bbl or 10.8% more than a year ago, while implied demand plunged 895,000 bpd to 3.387 million bpd during the week profiled, the third lowest weekly demand rate of 2019. Demand weakness for distillates aligned with weakening manufacturing, with the Institute of Supply Management reporting an unexpected 0.7% decline in the U.S. manufacturing index during May to a 52.1 32-month low. Diesel demand in the United States is primarily generated by the industrial and commercial sectors.
Weakness is reflected in total oil product supplied to market data, which plunged 2.009 million bpd during the week profiled to 19.49 million bpd, the second lowest implied demand rate in 2019. Combined commercial crude and oil products inventory surged 22.4 million bbl or 1.7% during the week profiled to 1.308 billion bbl, a nearly 21-month low.
Brian L. Milne can be reached at email@example.com
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