Supply Data, US PMI Lift Oil Futures

WASHINGTON (DTN) -- Crude and distillate fuel futures contracts on the New York Mercantile Exchange and Intercontinental Exchange continued higher for the third straight trading day Thursday, with the NYMEX gasoline and distillate contracts settling at five-week highs, again gaining on bullish inventory data released at midweek and a higher-than-expected reading on U.S. manufacturing output in October.

NYMEX December West Texas Intermediate futures ended up $0.26 at $56.23 barrel (bbl) and the ICE December Brent contract gained $0.50 to a $61.67 settlement. NYMEX November ULSD futures rallied 2.2 cents to $1.9863 gallon and the November RBOB contract moved up 1.13 cents to end the session at $1.6632 gallon.

Crude contracts shed early weakness after the release of the U.S. Purchasing Manager's Index that unexpectedly turned higher this month following a slump to a multi-year low in September. Private survey estimated October's flash U.S. PMI reading advanced to 51.5, gaining with an uptick in new orders and elevated business expectations which have improved to a four-month high.

The supportive data lent the market optimism about the economy, further bolstered by bullish demand data for gasoline detailed at midweek by the Energy Information Administration that coincided with steep drawdowns in U.S. product stockpiles last week.

Gasoline demand increased 236,000 barrels per day (bpd) to 9.59 million bpd during the week ended Oct. 18, while 2.3% above the year-ago period during the most recent four weeks. Distillate demand over the four weeks ended Oct. 18 averaged 4.109 million bpd, up 0.8% against year ago, while supply of distillate fuels is down 12% against the five-year average.

Earlier in the session, the oil complex came under light selling pressure after overnight data from the Eurozone showed further contraction in manufacturing and service sectors within the 28-nation bloc. In Germany, business activity fell to a near seven-year low, with the manufacturing index up marginally from September at 41.9, but still at a decade low and deep in contraction territory.

Eurozone's consumer confidence index also fell a full percentage point below the September reading, down to minus 7.6%, suggesting the European Central Bank's massive stimulus plan has yet to produce tangible results for the bloc's economy.

ECB, which held the final policy meeting chaired by Mario Draghi Thursday, left the interest rates unchanged at negative 0.5% after cutting the rate at their previous meeting when the central bank also revived its bond-buying program indefinitely. Christine Lagarde, the former chief of the International Monetary Fund and France's finance minister will take charge of Europe's central bank in November with expectations she will be able to persuade Europe's governments to adjust policy to aid economic growth during her tenure.

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

(BAS)