DTN Oil

WASHINGTON (DTN) -- New York Mercantile Exchange oil futures deepened losses in midmorning trade Wednesday, with the RBOB June contract trading as much as 3% lower in reaction to the inventory report from the U.S. Energy Information Administration showing gasoline stockpiles rose sharply during the final week of April as demand for the motor fuel retreated below 9 million barrels per day (bpd) ahead of the busy summer driving season.

U.S. commercial crude oil stockpiles fell by 1.3 million barrels (bbl) last week to 459.6 million barrels, and are now about 2% below the five-year average, the EIA said. Markets have mostly expected crude stockpiles to fall by 1.2 million bbl from the prior week.

The decline came despite a 2-million-barrel transfer of crude oil last week from the nation's Strategic Petroleum Reserve to the commercial side. Similar sales will continue through June, according to the Energy Department, which is conducting the transactions.

Oil stored at the Cushing, Oklahoma, hub -- the delivery point for West Texas Intermediate -- increased by 541,000 bbl from the previous week to 33.6 million bbl, the EIA said in its weekly report. U.S. crude oil production increased by 100,000 bpd from the previous week to 12.3 million bpd, according to the EIA. The crude draw was realized despite domestic refiners scaling back run rates to 90.7%, processing 98,000 bpd less than the previous week's average.

Gasoline stockpiles jumped by 1.7 million bbl to 222.9 million bbl, compared with analysts' expectations of a 1-million-barrel decrease. Demand for motor gasoline, meanwhile, declined by 893,000 bpd from the prior week to 8.618 million bpd.

Distillate fuel oil stocks, which are mostly diesel fuel, fell by 1.2 million bbl to 110.3 million bbl, and remain about 12% below the five-year average, the EIA said. Analysts had forecast distillate inventories would fall by 700,000 bbl from the previous week.

Total products supplied over the last four-week period averaged 19.6 million bpd, up by 1.7% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 8.9 million bpd, up by 1.1% from the same period last year. Distillate fuel oil product supplied averaged 3.8 million bpd over the past four weeks, up by 0.2% from the same period last year.

Near 11:15 a.m. EDT, NYMEX RBOB June futures dropped back $0.1110 to $2.3241 gallon and ULSD April futures fell $0.0726 to $2.2169 gallon. NYMEX West Texas Intermediate futures for May delivery declined $3.32 to trade near $68.31 bbl.