WTI, ULSD Futures buoyed By Draws, Gasoline Down on Build

Brian L Milne
By  Brian L. Milne , DTN Refined Fuels Editor

CRANBURY, N.J. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange moved mixed in line with their weekly change in inventory reported by the Energy Information Administration in late morning trade on the last day of the third quarter and ahead of the October oil products contact expirations.

Late morning, November West Texas Intermediate futures were up a modest $0.31 at $39.60 per barrel (bbl) and October ULSD futures 1.64 cents higher at $1.1254 gallon, with the November contract holding a 0.75 cents premium to the expiring contract. October RBOB futures were down 1.17 cents at $1.1900 gallon, with the November contract trading at a 2.85-cent discount in the seasonally backwardated market.

EIA reported draws from commercial crude and distillate fuel inventory and a build in gasoline, with total commercial stocks edging down 600,000 bbl to 1.421 billion bbl despite a 992,000 barrels per day (bpd) drop in product supplied to the U.S. market to 17.447 million bpd during the week ended Sept. 25.

Commercial crude supply declined for the third straight week, contrasting with expectations for a 1.05 million bbl build and at 2 million bbl, larger than an 831,000 bbl draw reported late Tuesday by the American Petroleum Institute. Commercial crude stocks are down 8 million bbl during the most recent three weeks to the lowest level since early April at 492.4 million bbl, although are 16.5% above year ago.

A 300,000 bpd increase in crude inputs at U.S. refineries to 13.67 million bpd partly explains the draw, with domestic production unchanged at 10.7 million bpd. However, the big driver in the draw that helped outpace the 1.8 million bbl decline from the Strategic Petroleum Reserves were exports.

EIA reported U.S. crude exports jumped 490,000 bpd on the week to 3.512 million bpd, a 4-1/2 month high, cutting the net import rate to a modern-day record low 1.61 million bpd. Total crude and product exports averaged a five-month high last week at 8.652 million bpd.

Distillates inventories declined a more than expected 3.2 million bbl, slightly less than an API reported 3.424 million bbl draw, with the third straight weekly decline pressing the stock level to a four-month low 172.8 million bbl, albeit 31.6% above year ago and 20.4% above the five-year average. The draw was boosted by a 171,000 bpd increase in distillate exports to 1.299 million bpd, partly offsetting a 304,000 bpd decline in product sent to the U.S. market at 3.655 million bpd. Four-week average demand is down 8.9% against the comparable year-ago period at 3.534 million bpd.

In addition to exports, the draw was supported by a 112,000 bpd decline in distillate production to 4.358 million bpd, the lowest output rate since September 2017 when Hurricane Harvey had shuttered refineries in Houston and Port Arthur, Texas.

Gasoline inventory increased 700,000 bbl to 228.2 million bbl that contrasted with expectations for a 1.2 million bbl draw, although below an API reported 1.623 million bbl build. Gasoline imports outpaced exports to lift the supply level, with inventory sitting just below year ago. Still, gasoline supplied to the U.S. market is down 13.5% during the first nine months of the year against the comparable period in 2019.

Brian L. Milne can be reached at brian.milne@dtn.com

Brian Milne