WASHINGTON, D.C. (DTN) -- Nearest delivered New York Mercantile Exchange oil futures and Brent on the Intercontinental Exchange pulled back in overnight trade, shrugging off Wednesday's bullish supply data, as market participants await key meetings at the G20 Summit in Japan and OPEC meeting in Vienna.
At 9 a.m. ET, NYMEX August West Texas Intermediate futures were down $0.30 near $59.10 per barrel (bbl), with the ICE August Brent contract also $0.30 lower near $66.15 bbl ahead of contract expiration Friday afternoon, with the September contract at about a $0.75 discount to the expiring contract. NYMEX July RBOB futures were down 3.3 cents near $1.9375 gallon, trading at a 3.35-cent premium to August delivery. NYMEX July ULSD futures were 1.35 cents lower near $1.9575 gallon, with the August contract holding a nearly 1cts premium to July delivery.
Oil futures settled at five-week highs on Wednesday after bullish government data showed across-the-board draws in U.S. crude and petroleum products inventories, with a much larger-than-expected 12.8 million bbl drop in commercial crude stockpiles during the week ended June 21. West Texas Intermediate found additional support from a lower rate of domestic production, which slid to a six-week low after declining for three consecutive weeks. Crude oil imports also declined, averaging 6.7 million barrels per day (bpd) as of June 21, down 812,000 bpd from the previous week, while exports spiked to a 3.8 million bpd record high. While the size of the drop in U.S. inventories and export rate surpassed market expectations, crude stockpiles are 8.8% above the five-year average.
On the bearish side, government data showed implied demand for both gasoline and distillates slipped last week, with demand for gasoline falling for the first time in four weeks and from a record high of 9.928 million bpd. Implied demand for distillates was again lower, down to 3.968 million bpd as of June 21, although 2.9% above year ago for the four weeks ended June 21.
The supply surplus continues to hang over markets ahead of the highly anticipated meeting between U.S. President Donald J. Trump and China's Xi Jinping this weekend at the G20 Summit in Japan. Trump said on Wednesday a trade deal with China is possible, but he is prepared to immediately impose U.S. tariffs on the remaining Chinese imports without a tariff if the two countries fail to reach an agreement. Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman are also scheduled to meet at G-20 summit on Friday and could indicate the policy direction for managing oil production ahead of the OPEC/non-OPEC meeting in Vienna early next week.
Amid a prevailing bearish outlook for demand and unresolved trade disputes, the OPEC+ alliance is scheduled to meet on Monday in Vienna with no clear message on an extension of the 1.2 million bpd production cuts into the second half of the year. The exact level and length of the cuts is yet to be negotiated, with Russia reluctant to commit to any cuts before the G-20 summit.
Separately, Philadelphia Energy Solution announced on Wednesday the permanent closure of 335,000 bpd Philadelphia Refining Complex -- a key supplier to the New York gasoline market. NYMEX RBOB July futures spiked 9.32 cents on Wednesday to settle at a five-week high. The refinery, the largest on the East Coast, suffered explosions and extensive fire on June 21 which disrupted refinery operations and caused massive damage to several crude-processing units.
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