NYMEX RBOB Futures Plunge as Gasoline Demand Falters

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Nearby delivery month oil futures on the New York Mercantile Exchange tumbled in afternoon trade Wednesday, sending the U.S. crude benchmark below $73 barrel (bbl) after data from the Energy Information Administration showed implied gasoline demand for the week ended July 9 failed to meet bullish expectations and diesel stocks increased above the consensus, offsetting a larger-than-expected draw from U.S. commercial crude oil inventories.

At settlement, NYMEX August RBOB futures declined 2.48 cents or 1.19% to $2.2935 gallon and NYMEX August ULSD futures plunged more than 4 cents to $2.1435 gallon. NYMEX West Texas Intermediate August futures fell $2.12 to $73.13 bbl and international Brent crude benchmark for September delivery shed 1.73 cents to $74.76 bbl.

EIA data, delayed Wednesday morning due to technical issues, showed nationwide gasoline consumption plummeted 760,000 barrels per day (bpd) or 8% during the week covering the July 4 holiday weekend, cutting through some of the optimism over fuel demand during the summer season.

Some analysts have been saying U.S. consumers with government stimulus checks and savings from months of COVID-19 restrictions could handle gas prices that are near seven-year highs, but Wednesday's data cast a shadow over that optimism. DTN Refined Fuels Data show gasoline demand was down 5.2% in the reviewed week, while distillate consumption plummeted 12%. EIA shows distillate stocks, meanwhile, rose by 3.7 million bbl from the previous week to 142.3 million bbl, compared with calls for distillate supplies to rise by 900,000 bbl. Gasoline stockpiles rose by 1 million bbl to 236.5 million bbl and now stand just 1% below the five-year average, according to the EIA.

On the bullish side, commercial crude oil inventories fell by 7.9 million bbl from the previous week to 437.6 million bbl, and are now about 8% below the five-year average, EIA said. Analysts expected crude stockpiles would fall by 4 million bbl from the prior week. Oil stored at Cushing, Oklahoma, the delivery point for West Texas Intermediate contract, fell by 1.5 million bbl to 38.1 million bbl. The larger-than-expected draw came even as domestic production rose by 100,000 bpd from the previous week to 11.4 million bpd.

Markets remain on edge amid unconfirmed reports that Saudi Arabia has reached an agreement with the United Arab Emirates to ease OPEC+ production quotas until the end of the year, agreeing to raise the Abu Dhabi production baseline to 2018 levels. Disagreement between the two Gulf OPEC allies over production quotas have blocked OPEC+ alliance to release an additional 400,000 bpd of crude oil supplies a month through the end of the year after Abu Dhabi requested a review of its production baseline. Wire services report that UAE has been considering increasing production outside of the OPEC+.

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

Liubov Georges