WTI Futures Reverse Higher

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Erasing earlier losses, West Texas Intermediate and RBOB futures on New York Mercantile Exchange finished Thursday's session higher, drawing support from another weekly drawdown from Cushing storage tanks in Oklahoma and higher U.S. gasoline demand, while a weakening greenback lent additional support for the U.S. crude benchmark.

U.S. dollar fell back 0.7% in index trade against a basket of foreign currencies on Thursday to trade at a nine-week low 98.372, settling below the 100-day moving average for the first time since March 11. Greenback's retreat came after U.S. Bureau of Economic Analysis revised lower its estimate for the first-quarter gross domestic product by 0.2% to a negative 5%. Market consensus calls for U.S. economy to contract by a staggering 40% during the current second quarter before gradually stabilizing in the third and fourth quarters.

Market also sought clues from Thursday's unemployment data about emerging patterns in the labor market. Bureau of Labor Statistics reported the number of first-time unemployment claims eased to 2.123 million for the week-ended May 23 that although painfully high, represent a decrease in initial claim filings from the previous week by 323,000. Initial jobless claims peaked at 6.796 million mid-April and has since been in a downtrend every single week through May 23, albeit are above 40 million. U.S. continued unemployment claims shed 3.9 million from the previous week to 21.052 million, while unemployment rate declined for the first time since first coronavirus-related layoffs began.

Underlining this trend, U.S. gasoline demand continued higher during the week-ended May 22, rising 463,000 barrels per day (bpd) to 7.253 million bpd but still down 23% from the same week in 2019. EIA showed gasoline stockpiles fell a larger-than-expected 724,000 barrels (bbl) on the week, while still 10.4% higher than year ago.

NYMEX RBOB June futures settled up $0.0052 at $.9985 gallon, with the July contract settling up $0.0083 at $1.0260 gallon.

The EIA's report, however, also showed commercial crude supplies jumped 7.9 million bbl last week, contrasting with expectations, while crude inventories at the U.S. Cushing storage hub in Oklahoma fell 3.4 million bbl on the week.

On Thursday, NYMEX WTI July futures settled up $0.90 at $33.71 bbl, with the August contract settling up $0.83 at $34.06. ICE July Brent futures settled up $0.55 at $35.29 bbl, with the August contract settling up $0.58 at $36.03 bbl.

The report, however, was bearish for distillate fuels, with demand continuing lower and stocks building for an eighth consecutive week through May 22. Distillate inventories added 5.5 million bbl to 164.3 million bbl, a better than three-year high.

Implied demand for distillates fell 11% in the week profiled, down 402,000 bpd to 3.266 million bpd and 13.6% lower than the same week in 2019. ULSD June futures settled down $0.0465 at $.9256 gallon, with the July contract settling down $0.0348 at $.9751 gallon.

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

Liubov Georges