WASHINGTON (DTN) -- Crude and refined products futures on the New York Mercantile Exchange and the Intercontinental Exchange edged higher in pre-inventory trade Wednesday, with the nearby delivery West Texas Intermediate contract trading near a one-year high after industry data reported a larger-than-expected draw from U.S. commercial crude oil inventories and a surprise decline in gasoline stocks during the final week of January, while investors monitor a technical meeting among Organization of the Petroleum Exporting Countries for clues on future production rates.
The American Petroleum Institute late Tuesday reported U.S. commercial crude stockpiles plummeted 4.261 million barrels (bbl) in the week ended Jan. 29 versus expectations for a draw of 300,000 bbl, while stocks at the Cushing, Oklahoma hub also continued lower, down 1.885 million bbl from the previous week. If confirmed in government data later Wednesday morning, the draw would press domestic crude supplies to their lowest since late March 2020 when stocks were at 469.193 million bbl. The data also showed an unexpected 240,000 bbl decline in domestic gasoline supplies, missing calls for a build of 900,000 bbl and a 1.622 million bbl drop in distillate inventories, better than estimates for a 600,000 bbl draw.
U.S. Energy Information Administration will release its weekly inventory report 10:30 a.m. ET.
Near 7:30 a.m. ET, WTI futures for March delivery added 30 cents to trade just above $55 bbl and the international crude benchmark Brent contract on ICE gained a steeper 44 cents to trade near a one-year high above $58 bbl. The March ULSD contract on NYMEX climbed 1.20 cent to $1.6869 gallon and NYMEX RBOB March futures rallied 3.25 cents to trade at $1.6485 gallon.
Morning gains in the oil complex come ahead of an OPEC+ Joint Ministerial Monitoring Commitment where a technical panel for the alliance will review compliance with the group's production agreement reducing 7.2 million barrels per day (bpd) in crude output. A Joint Technical Committee, which met on Tuesday, reviewed supply and demand fundamentals and concluded the global market will be in deficit each month throughout 2021, according to a base-case scenario, peaking at 2 million bpd in May. The document obtained by Reuters showed the group expects the deficit despite having lowered its forecast for global demand growth this year to 5.6 million bpd, down 300,000 bpd from the previously released estimate. In December, oil demand projected to recover to 97.9 million bpd, some 2 million bpd below the pre-pandemic level. In an alternative scenario that expects demand growth shrinking further, the JTC sees the market flipping into a surplus in April and December, the document showed.
Supporting the narrative of weaker demand growth this year, Germany, Netherlands, and other European economies extended lockdown measures through the mid-February amid a resurgence in COVID-19 cases and the lackluster rollout of vaccination campaigns. Faced with supply shortages, Germany and France have only vaccinated about 2% of their populations, raising prospects for another extension of lockdown measures and more economic pain for their countries' struggling businesses. Overnight data showed Eurozone's economic downturn deepened in January as renewed restrictions hit the bloc's service industry hard, offsetting robust performance by manufactures, according to IHS Purchasing Managers Index Composite survey.
Eurozone's Composite PMI fell to 47.8 from December's 49.1, indicating contraction in business activity for both months. Eurostat reported this week gross domestic product for the 19-nation economic bloc fell to a negative 0.7% in the fourth quarter 2020, raising prospects for a recession amid current weakness in the first quarter.
Liubov Georges can be reached at email@example.com