DTN Oil

WASHINGTON (DTN) -- New York Mercantile Exchange oil futures and Brent crude traded on the Intercontinental Exchange were rangebound early Wednesday after industry data showed U.S. commercial crude oil inventories decreased by a larger-than-expected margin during the week-ended January 19, while a softer U.S. dollar pressured by risk-on sentiment in financial markets further limited the downside for the oil complex.

The American Petroleum Institute reported late Tuesday commercial oil stockpiles in the United States tumbled by 6.674 million bbl last week, more than four times an expected 1.4 million bbl drawdown. At 429.9 million bbl, U.S. crude oil inventories currently stand about 3% below the seasonal five-year average. Supply at the Cushing, Oklahoma tank farm, the New York Mercantile Exchange delivery point for West Texas Intermediate futures, also fell by 2.031 million bbl. Bearish elements in the report could once again be found in the refined fuels complex, with gasoline stockpiles surging by 7.183 million bbl in the reviewed week, nearly five times calls for a build of 1.5 million bbl. If confirmed by government data later this morning, this would mark the fourth consecutive weekly build in commercial gasoline stocks that currently stand just above the five-year average. Data further show distillate stockpiles decreased by 245,000 bbl versus an expected decline of 700,000 bbl. Next, traders await the release of the weekly inventory report from the U.S. Energy Information Administration, scheduled for 10.30 AM ET.

Near 7:30 a.m. EST, the U.S. crude benchmark for March delivery traded modestly lower at $74.19 bbl, with next-month April futures trading near parity at $74.10 bbl. International crude benchmark Brent March contract slipped $0.27 to $79.29 bbl, with the prompt spread widening backwardation to $0.40 bbl. NYMEX February RBOB futures eased $0.0155 to $2.1946 gallon, and February ULSD futures retreated $0.0241 to near $2.6672 gallon.

In financial markets, the U.S. dollar index lost 0.43% against the basket of foreign currencies to trade near 102.955, lending tepid support for the front-month West Texas Intermediate contract.

Weighing on the oil complex, Russia has resumed oil exports from the Baltic port of Ust-Luga mid-day Monday, less than 24 hours after a suspected drone attack on a gas processing facility adjacent to export terminals. Market sources, however, anticipate Russia's oil shipments could experience some delays in the coming days amid ongoing maintenance and increased security concerns. Sunday's attack on the Ust-Luga fuel terminal along with weather-related loading restrictions pressed Russian oil exports to a nearly two-month low 3.02 million bpd during the week-ended Jan. 21, according to tanker-tracking data analyzed by Bloomberg.

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