DTN Oil

WASHINGTON (DTN) -- Except for the ULSD contract that softened 1% in early action Wednesday, oil futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange advanced on a weaker U.S. Dollar Index after softer-than-expected macroeconomic data in the United States eased pressure on the Federal Reserve to raise interest rates further this year, while an outsized draw in U.S. commercial oil inventories lifted the front-month West Texas Intermediate contract close to $82 barrel (bbl).

The American Petroleum Institute reported late Tuesday commercial crude oil inventories in the United States plunged 11.486 million bbl during the week ended Aug. 25, more than five times an expected 2-million-bbl downturn. If realized, that would mark the third consecutive weekly draw in U.S. commercial crude oil inventories that currently sit 2% below the seasonal five-year average. Stocks at the Cushing, Oklahoma, tank farm -- the New York Mercantile Exchange delivery point for West Texas Intermediate futures -- also fell 2.23 million bbl. Further details of the report showed gasoline stocks in the United States rose 1.4 million bbl in the week ended Aug. 25, missing calls for a 1.3-million-bbl draw, while distillate inventory increased 2.46 million bbl versus an expected decline of 500,000 bbl. Next, traders will shift their focus to the official inventory report from the U.S. Energy Information Administration, scheduled for 10:30 a.m. EDT release.

Also on Wednesday, investors monitored a rapidly strengthening Hurricane Idalia that is now forecasted to make its landfall Wednesday morning as a Category 4 hurricane near the big bend region of Florida. DTN Weather Ops forecasted further intensification is possible through the next six hours prior to landfall. Dangerous flooding may result from large rain accumulations and significant storm surge. Embedded tornadoes within rainbands will also be a concern across the affected area over the next 36 to 48 hours.

Idalia will bring impacts through Florida and portions of the southeastern U.S. before moving back into the Atlantic later this week. The hurricane is all but certain to disrupt holiday travel over Labor Day weekend, bringing a weaker-than-usual end to an already soft summer demand season. U.S. gasoline consumption remained below 9 million barrels per day (bpd) for all but one of the past seven weeks despite the peak driving demand during the summer season.

In financial markets, the U.S. dollar eroded further against the basket of foreign currencies after fresh macroeconomic data suggested the U.S. labor market is losing its post-pandemic momentum heading into the fall months. Government data released Tuesday showed job openings in the U.S. declined to the lowest level since March 2021, with quit rates decreasing in 16 U.S. states. At 8.8 million, the number of unfilled positions last month was 800,000 below June's figure and bearish against expectations for 9.6 million open positions. Separate data released Tuesday from the Conference Board showed consumer confidence in the U.S. fell markedly in August, erasing back-to-back gains over the June-July period. The Expectations Index was just a hair above 80, with a reading below 80 historically signaling a recession within the next year.

"August's disappointing headline number reflected dips in both the current conditions and expectations indexes. Write-in responses showed that consumers were once again preoccupied with rising prices in general, and for groceries and gasoline in particular," Dana Peterson, chief economist at The Conference Board, said in comments released with the data.

Near 7:30 a.m. EDT, the U.S. dollar plunged 0.04% against a basket of foreign currencies to settle near a one-week low at 103.420, while spurring gains for the front-month West Texas Intermediate contract that jumped to $81.67 bbl, up $0.51 bbl on the session. The international crude benchmark Brent contract added $0.50 bbl to near $85.99 bbl settlement. NYMEX ULSD futures softened $0.0065 to near $3.2030 and NYMEX RBOB September futures advanced $0.0114 to $2.8019 gallon.

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