NYMEX Oil Futures Flat After API Reports Weekly Stock Draws

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Nearby delivery oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange were little changed in early trade Wednesday, with the West Texas Intermediate July contract holding just below $66 per barrel (bbl) after the American Petroleum Institute reported a modest draw from U.S. commercial crude oil inventories during the week-ended May 21 accompanied with larger-than-expected declines in refined product supplies.

Near 7:30 a.m. ET, NYMEX July WTI edged slightly lower to $65.91 bbl, and the international crude benchmark Brent contract for July delivery traded little changed near $68.55 bbl. NYMEX June RBOB futures gained 0.32 cents to $2.1205 gallon, while June ULSD futures fell 0.36 cents to $2.0318 gallon.

The API data released late Tuesday showed domestic crude oil supplies declined 439,000 bbl last week compared with analyst expectations for a 900,000 bbl drop, while stocks at the Cushing supply hub in Oklahoma were drawn down by more than 1 million bbl from the previous week. U.S. crude oil inventories currently stand about 1% below the five-year average.

Gasoline supplies fell 1.153 million bbl which was slightly below analyst expectations, while distillate inventories posted a hefty 5.137 million bbl draw, far exceeding estimates for a decline of 1.5 million bbl. Should Energy Information Administration data confirm the outsized draw, this would press distillate inventories to 6% below the five-year average.

Distillate consumption is often seen as a proxy for economic activity, with uses for the middle of the barrel fuels ranging from industrial and agricultural processes to transportation fuel for heavy-duty vehicles.

Last week, U.S. Purchasing Manufacturing Index showed businesses activity across services and industrial sectors accelerated sharply, with the combined index posting series high readings of 68.1 from 63.5 in April. In the manufacturing sector, the flash PMI rose to a record 61.5 in May from 60.5, while economists expected no change.

Commenting on the data, "the US economy saw a spectacular acceleration of growth in May, the rate of expansion of business activity soaring well above anything previously recorded in recent history as the economy continued to reopen from COVID-19 restrictions," noted Chris Williamson, chief business economist at IHS Markit.

However, the survey also pointed to the risks of rising inflation, with input costs rising at the fastest pace since July 2008.

"Average selling prices for goods and services are both rising at unprecedented rates, which will feed through to higher consumer inflation in coming months" added Williamson.

Consumer unease with rising inflation was apparent in Tuesday's release of consumer sentiment, with the index falling in May for the first time in four months.

Furthermore, rising prices slowed demand for new homes sales, down 5% in April to 863,000, according to data from the Census Bureau. March figures were also revised lower to 917,000 from the previously reported 1.021 million.

The median new house price jumped 20.1% from a year earlier to $372,400 in April. The Federal Housing Finance Agency House Price Index soared 13.9% in March against previous year.

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

Liubov Georges