WTI Tumbles 1.6% on Trade Concerns

WASHINGTON (DTN) -- Crude and product futures on the New York Mercantile Exchange and Intercontinental Exchange extended losses on Thursday, while NYMEX ULSD and RBOB November contracts expired nearly 2% lower after bearish Chinese industrial data and renewed pessimism over the U.S.-China trade deal fueled a market selloff late afternoon.

After declining for five straight sessions, NYMEX December West Texas Intermediate futures ended down $0.88 at $54.18 barrel (bbl), while on track for nearly 4.5% weekly drop. ICE December Brent futures expired $0.38 lower at $60.23, with the now front-month delivery January contract settling at $59.62 bbl. Both benchmarks posted little change on the month.

NYMEX November ULSD contract rolled off the board at $1.8780 gallon, down 3.56 cents on the session, while posting a counter-seasonal decline of 1.4% in October. NYMEX December ULSD contract settled 2.64 cents lower at $1.8780 gallon, while narrowing its discount to the now expired November contract to 0.22 cents on the session.

November RBOB contract expired down 3.33 cents at $1.6312 gallon and December futures narrowed its discount to 3.66 cents in afternoon trade to end the session at $1.5946 gallon. NYMEX RBOB futures posted a counter-seasonal 1.6% increase in October, boosted by strong demand.

Oil futures came under selling pressure on Thursday after Bloomberg reported Chinese officials cast doubt on a long-term trade agreement with the Trump administration, even though both sides are inching closer to signing "phase 1" of the trade pact. Adding to uncertainty, the Asia-Pacific Economic Forum that was intended to serve as the location for the two leaders to meet and sign the bilateral trade agreement was called off this week, throwing in doubt the resolution of a yearlong tariff spat between the two countries.

Amidst increased trade uncertainty, China reported overnight its manufacturing index contracted again in October, after declining for the last six months. China's non-manufacturing marker also dropped to the lowest reading since January 2016.

Even a shutdown of the 590,000 barrels per day (bpd) Keystone Pipeline had a short-lived effect on prices, with futures quickly erasing gains from earlier in the session, outweighed by a large crude build detailed in a midweek inventory report. Government data reported on Wednesday a much-larger-than-expected 5.7 million bbl increase in domestic crude supplies, while imports increased, and exports tumbled on week.

During the week of Oct. 25, gasoline and distillate fuel stockpiles plunged to multi-month lows, suggesting strong demand in the market for refined products. Gasoline demand ticked up 200,000 bpd last week to average 9.784 million bpd, nearly 5.6% above the corresponding week in 2018. Demand for distillates also gained 187,000 bpd to 4.263 million bpd as of Oct. 25, 3.7% lower than the same week in 2018.

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

(BAS)