DTN Oil

WASHINGTON (DTN) -- Except for the prompt RBOB contract, which fell 1.5% in afternoon trading, oil futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange settled the Thursday session modestly higher, finding support from falling crude oil inventories in the United States and signs of a tightening global market.

At settlement, West Texas Intermediate September futures on NYMEX snapped three sessions of losses to settle $1.01 bbl higher at $80.39 bbl, and international crude benchmark Brent for October delivery advanced $0.67 bbl to $84.12 bbl. NYMEX ULSD September contract rallied $0.0729 gallon for a $3.0938 per gallon settlement. Moving in the opposite direction, nearby-month RBOB futures on NYMEX declined $0.0454 gallon to $2.8217 gallon.

Thursday's mostly higher settlements follow an inventory report from the U.S. Energy Information Administration showing domestic oil inventories fell last week to the lowest levels since January as refiners ramped up crude throughputs. At 439.7 million bbl, commercial oil inventories currently stand some 1% below the seasonal five-year average. Oil stored at Cushing, Oklahoma, the delivery point for the WTI futures contract, fell to its lowest since late April 2023 at 33.8 million bbl.

Domestic refiners recovered some of the production shuttered following the extreme heat wave across Texas and Louisiana earlier this month to process 16.746 million bpd last week.

In financial markets, the U.S. dollar resumed its recent rally on Thursday, gaining 0.13% against the basket of foreign currencies to settle the session at a better-than-two-month high 103.319. Greenback's strength follows the reports of the Chinese government ordering state-owned banks to buy yuan in both onshore and offshore exchange markets this week. The Chinese currency has sunk to a nine-month low 7.3115 against the U.S. dollar after its central bank cut its key interest rate to the lowest level since early 2020 in an effort to shore up the country's struggling economy. This week's macroeconomic data revealed China's industrial production continued on a downward trajectory in July, while retail sales - a measure of consumer spending - failed to pick up momentum after an initial post-COVID bounce. Additionally, pressure is building in China's financial and property sector with its largest non-bank lender, Zhongshan International Trust, reportedly missing payments on its investment products to three separate companies. Oil traders closely monitor developments around China's property crisis and potential signs of a spillover into the broader economy with Beijing being one of the largest buyers of crude oil in the physical market. OPEC in its Monthly Oil Market Report estimated China's crude imports fell to a six-month low 10.3 million bpd in July from a near record-high 12.7 million bpd seen in the prior month.

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