WTI Futures Drop to 9-Week Low

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange continued their selloff Thursday, although moved off intra-session lows after inventory data reported a modest draw in U.S. crude stocks. Meanwhile, concerns over slowing global fuel demand related to the viral outbreak in China continue to weigh on the market's sentiment.

The U.S. dollar rallied to a better-than-six-week high of 97.590 in afternoon index trade, also weighing on West Texas Intermediate futures throughout the trading session.

At settlement, NYMEX March WTI futures shed $1.15 to a nine-week spot low of $55.59 per barrel (bbl), while ICE March Brent futures dropped back $1.17 to $62.04 per bbl. NYMEX February RBOB futures declined 1.94 cents to $1.5602 gallon, and the front-month ULSD contract fell 0.86 cent to $1.7916 gallon, paring a decline to a $1.7506 5 1/2-month low on the spot continuous chart.

Global markets continue to be rattled by the spreading coronavirus, fearing it could turn into global pandemic after new suspected cases were reported in Europe and South America. China announced the city of Wuhan, the epicenter of a new disease, cancelled all major public events related to the celebration of Lunar New Year. Meanwhile, two of China's cities are currently under lockdown as authorities scramble to control the virus that has sickened more than 600 people.

Weighed down by these concerns, WTI crude futures slumped to a $54.77 nine-week low in intra-session trade before paring the decline after Energy Information Administration released their inventory report late morning, showing domestic crude stocks declined for the second straight week though Jan. 17. Data reported a 405,000 bbl drawdown from U.S. commercial supplies occurred last week, with a hefty 961,000-bbl decline at Cushing, Oklahoma -- the delivery location for WTI futures.

Data was mixed for refined fuels, showing an 11th straight weekly increase in gasoline supply that pushed inventories to a record high 260 million bbl. Still, a 1.7-million-bbl build was less than anticipated by the market and below the American Petroleum Institute estimate. Distillate fuel inventories decreased for the first time in four weeks, down 1.2 million bbl, pressing supplies 2% below the five-year average.

Implied demand for both distillates and gasoline fuel gained on the week.

Liubov Georges can be luibov.georges@dtn.com

(BAS)

Liubov Georges