DTN Oil

WASHINGTON (DTN) -- New York Mercantile Exchange nearest delivery oil futures edged lower in reaction to weekly inventory data from the Energy Information Administration released late Thursday morning, detailing gasoline and distillate fuels stockpiles unexpectedly increased during the final week of May amid softer demand for refined products, while a larger-than-expected draw from commercial crude oil supplies curtailed the downside.

The government inventory report was directionally in sync with private data from the American Petroleum Institute, with both showing commercial crude oil supplies declined by more than 5 million barrels (bbl) last week, far exceeding expectations for a 2.3 million bbl draw. At 479.3 million bbl, U.S. commercial crude stockpiles now stand about 3% below the five-year average. Larger-than-expected draw was realized as domestic refiners increased run rates to 88.7% of operational capacity, processing 15.597 million bbl of crude oil daily. This marked the highest run rate since February last year when refiners operated at 89.4% of operational capacity.

U.S. crude oil production fell by 200,000 barrels per day (bpd) from the previous week to 10.8 million bpd, according to the government data. Oil stored at Cushing, the delivery point for West Texas Intermediate futures rose by 784,000 bbl from the previous week to 45.5 million bbl. In refined fuels, gasoline stocks gained 1.5 million bbl from the previous week to 234 million bbl, while remaining about 3% below the five-year average.

Demand for gasoline slid from a 14-month high 9.479 million bpd to 9.146 million bpd. Distillate stocks also increased unexpectedly during the week reviewed by a hefty 3.7 million bbl to 132.8 million bbl, although are now 7% below the five-year average.

Earlier in the week, analysts expected distillate supplies would fall by 1.1 million bbl. Distillate supplied to the U.S. market, a measure of demand, dropped 648,000 bpd from the previous week to 3.813 million bpd. Near the noon hour in

New York, NYMEX July ULSD futures were down 0.85 cent to near $2.0985 gallon and the July RBOB contact was down fractionally at $2.1935 gallon. NYMEX July WTI futures were modestly lower to trade near $68.75 bbl.

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