WTI Ends at 5-Month High

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Nearby delivery month oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange posted across-the-board gains Wednesday, although all contracts moved off session highs spurred by the sharp drop in U.S. crude oil inventories and supportive data on economic activity last month.

The U.S. dollar extended its recent decline into afternoon trade Wednesday, eroding 0.60% to a better than 2-year low 92.815 against a basket of foreign currencies, also supporting higher West Texas Intermediate crude futures.

On the session, the front-month WTI contract advanced 49 cents to $42.19 barrel (bbl) and international Brent crude settled with 74 cents gain at $45.17 bbl. NYMEX ULSD September futures finished the session marginally higher at $1.2631 gallon and front-month RBOB futures added 0.85 cents to $1.2228 gallon.

Economic activity in the U.S. service sector expanded at a robust pace in July with the Institute for Supply Management's non-manufacturing Purchasing Managers Index rising to a score of 58.1%. The new reading beat the market expectation of 55%. Further details of the report revealed that the New Orders Index climbed to 67.7%, although the Employment Index edged lower from 43.1% to 42.1%, indicating private business hired fewer workers than in the prior month. The Private Payroll Data collected by ADP badly missed market expectations Wednesday, with a mere 162,000 new jobs added in July compared with forecasts of 1.2 million jobs.

U.S. equities finished the session sharply higher, with the Dow Jones Industrial Index surging as much as 300-points and S&P 500 up 0.64%.

Separately, the U.S. Energy Information Administration reported domestic crude oil stockpiles slid 7.4 million bbl in the week ended July 31 to 518.6 million bbl, a 16-week low. Analysts called for a more modest decline of about 3.1 million bbl from the prior week. The large draw was realized even as crude exports slumped 392,000 barrels per day (bpd) from the previous week to 2.819 million bpd and imports increased 0.9 million bpd. The refining capacity utilization rate rose by 0.1% from the previous week to 79.6%, the highest level since the final week of March.

Gasoline demand continued to struggle in the most recent week, declining about 200,000 bpd or 2.2% to 8.617 million bpd, while stocks rose for the second week in a row, up by 419,008 barrels to 247.8 million barrels, while analysts were expecting a 2 million bbl decline.

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

Liubov Georges