WASHINGTON (DTN) -- New York Mercantile Exchange oil futures and Brent crude on the Intercontinental Exchange softened in early trade Thursday amid light profit taking. The nearby delivery month RBOB contract fell from a better than three-year high settlement, with Wednesday's advance spurred by bullish inventory data from the U.S. Energy Information Administration that showed nationwide gasoline stockpiles fell below the five-year average for the first time since the beginning of the coronavirus pandemic, supporting investor optimism over summer demand.
U.S. gasoline inventories unexpectedly fell 2.9 million barrels (bbl) in the week ended June 18, according to the government data released midmorning Wednesday, breaking a near month-long pattern of stock builds. Demand for the transportation fuel jumped to the highest level since the disruption of the Colonial Pipeline last month that triggered widespread panic buying at the pump, easing some concern that summer gasoline demand might underwhelm expectations.
A surprise draw from gasoline supplies was accompanied by a sharper-than-expected 7.6 million bbl fall in U.S. commercial crude oil inventories that have now declined for a fifth straight week through mid-June. At 459.1 million bbl, domestic crude oil stockpiles fell to the lowest level since the beginning of the coronavirus pandemic in March 2020 and now stand about 6% below their five-year average.
The bullish set of inventory data sent both West Texas Intermediate and Brent contracts to their highest spot settlements since late 2018, while the front-month RBOB contact outperformed the rest of the complex with a better than a three-year high settlement on the spot continuous chart.
After an expositive rally, NYMEX July RBOB futures eased 0.99 cents to trade near $2.2570 gallon and front-month ULSD futures declined 1.70 cents to $2.1424 gallon. NYMEX August WTI traded slightly lower near $73 bbl and the international crude benchmark Brent contract for August delivery eased $0.11 to $75.08 bbl.
Globally, oil stocks held by countries that are part of the Organization for Economic Cooperation and Development fell 1.6 million bbl below the pre-pandemic 2015-2019 average for the first time in more than a year, according to recent data from the International Energy Agency. Crude oil held in short-term floating storage also declined to the lowest since February 2020 at 99.4 million bbl.
"The massive overhang in global oil inventories that built up during last year's COVID-19 demand shock is being worked off as market fundamentals look decidedly stronger," said IEA.
Against the backdrop of destocking inventories, the Organization of the Petroleum Exporting Countries along with their partners outside the cartel are considering further unwinding their collective output cuts at their next meeting on July 1. The Wall Street Journal reported the group is considering boosting oil production by some 500,000 barrels per day (bpd) in August, possibly followed by similar increases in subsequent months.
Last month, OPEC+ announced plans to bring back 350,000 bpd of their production in June and 440,000 bpd in July. Saudi Arabia also said it would gradually add back 1 million bpd in voluntary cuts it made above and beyond its group commitment.
"The demand picture has shown clear signs of improvement," Saudi Energy Minister Prince Abdulaziz bin Salman said in some of his most upbeat comments since the crash last year.
Liubov Georges can be reached at firstname.lastname@example.org