Oil Futures Waver Ahead of Stock Data, Inflation Indicator

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Crude and refined products futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange traded on either side of unchanged early Wednesday after inventory data from the American Petroleum Institute showed another outsized build occurred in U.S. commercial crude oil supplies during the week ended March 5 along with much larger-than-estimated draws in refined fuels, with the data continuing to reflect the severe weather disruptions to operations at refineries in the U.S. Gulf Coast.

U.S. commercial crude stocks climbed 12.79 million barrels (bbl) in the most recent week, API data showed, after the largest build on record of 21.6 million bbl took place during the final week of February. Should the build be realized, it would push inventories on hand back to 5% above the five-year average.

The expected stock increase comes as nationwide refinery runs continue to hold well below normal. Refinery rates plummeted 12.6% during the week ended Feb. 26 to a record low 56%, leading to supersized drawdowns in refined products stocks. Tuesday's data once again showed gasoline inventories plunged far more than expected, sinking 8.499 million bbl while distillate inventories slid more than expected, down 4.796 million bbl.

The data undoubtedly reflects the aftermath of the big freeze across large parts of Texas and Oklahoma in mid-February, with some refiners taking longer to get their facilities back up and running. Platts S&P reported that at least six out of eighteen Texas refineries impacted by the storm, including those that shut all or some units, still operated at reduced capacity last week. Reduced runs are seen at Motiva's 607,000 barrels per day (bpd) and Total's 225,500 bpd Port Arthur, Texas, refineries.

Further weighing on the oil complex, U.S. Dollar Index partially reversed Tuesday's pullback and regained some upside traction, moving above the 92-level ahead of upcoming figures on inflation for February. The Bureau of Labor Statistics will release its estimate at 8:30 a.m. ET, with consensus calling for a 0.4% increase from the previous month to 1.7%.

The Federal Reserve Market Committee judges that inflation at the rate of 2%, as measured by the annual change in the price index for personal consumption expenditures, is most consistent over the longer run with the Federal Reserve's statutory mandate. Fed Chief Jerome Powell said earlier this month inflation is likely to rise above the Fed's mandate this summer -- something investors worry will push market rates up sooner than expected.

Should February's consumer price index come in above expectations, indicating faster-than-expected price increases, the reading could further boost the greenback and trigger renewed weakness for the oil complex.

Near 7:30 a.m. ET, West Texas Intermediate for April delivery added 40 cents to trade near $64.45 bbl and Brent May crude hovered around $67.80 bbl. NYMEX April ULSD futures traded little changed near $1.9115 gallon and front-month RBOB future added a fractional 0.30 cent to $2.0540 gallon after trading at a nearly 23-month high $2.1119 gallon on Monday.

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

Liubov Georges