DTN Oil

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange nosedived in midmorning trade Wednesday in reaction to weekly inventory data released by the Energy Information Administration showing a third consecutive build in U.S. commercial crude stocks and rebound in domestic production from a multiyear low as offshore platforms came back on-line after Tropical Storm Cristobal.

Heading to the noon hour in New York, NYMEX August West Texas Intermediate futures were down $2.84 near $37.56 per barrel (bbl), trading at a $2.30 discount to the August Brent contract on the Intercontinental Exchange. July ULSD futures slumped 5.67 cents to $1.1446 and front-month RBOB contact declined 9.62 cents or 7% to $1.2032 gallon.

Energy Information Administration data reported commercial crude oil supply for the week-ended June 19 spiked 1.4 million bbl to a fresh-record high 540.7 million bbl. The build was far larger than most analysts estimated, stoking fears of an oversupplied markets at a time when demand is struggling to rebound after weeks of coronavirus quarantine. Currently, nationwide commercial crude oil stocks stand about 16% above the five-year average. Data showed crude production rebounded 500,000 barrels per day (bpd) in the most recent week from a multiyear low 10.5 million bpd, with offshore operators restarting platforms shut in advance of Tropical Storm Cristobal.

Domestic refiners increased crude throughputs by 240,000 bpd in the most recent week to 13.84 million bpd, with run rates gaining to 74.6%.

Gasoline supplied to the market jumped 738,000 bpd to 8.608 million bpd, with motor gasoline inventories decreasing 1.7 million bbl on the week. Traffic data shows mobility activity in the United States rose to a 2020 high, up 46% during the week-ended June 19th. Gasoline demand is expected to tick higher during the summer season, with growth in gasoline consumption seen as a critical dynamic in the recovery for the U.S. oil market.

Distillate fuel supplied to the U.S. market eased 89,000 bpd for the reviewed week to 3.466 million bpd after improving for two weeks in a row from a 25-year low 2.718 million bpd. The rebound in distillate fuel demand has been weaker compared with motor gasoline, with manufacturing activity is still reported in contraction at multiyear low levels. For the reviewed week, distillate fuel stocks build by 249,008 bbl to 174.7 million bbl a week after posting first drawdown in nearly three months.

Total products supplied over the last four-week period averaged 17.1 million bpd, down 17% from the same period last year.

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

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