DTN Oil

CRANBURY, N.J. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent on the Intercontinental Exchange moved lower for the second session Wednesday following a mostly bearish data set from the Energy Information Administration showing an unexpected build in commercial crude inventory and second weekly decline in gasoline demand.

Market watchers anticipated the conclusion of the majority of seasonal maintenance at U.S. refineries would spur a third consecutive weekly drawdown in commercial crude inventory. The run rate did increase for a fifth consecutive week through March 22 at an 88.7% utilization rate, up 0.9% on the week. The higher run rate increased crude inputs at U.S. refineries by 147,000 bpd to 15.932 million bpd, EIA data shows, a 10-week high. Yet crude imports outpaced exports by 1.124 million bpd, prompting a 3.165 million bbl build in commercial crude inventory to 448.207 million bbl, erasing more than 90% of the stock drawdown experienced in the first half of March.

While greater refinery production was expected, gasoline stocks were seen to have been drawn down for an eighth week through March 22. Instead, gasoline inventory increased for the first time since late January, up 1.299 million bbl to 232.072 million bbl. The weekly increase in gasoline supply came on a combination of weak demand, higher imports and lower exports.

EIA data shows gasoline supplied to the U.S. market fell 94,000 bpd or 1.1% last week to an 8.715 million bpd four-week low, while down 329,000 bpd or 3.6% from the first week of March when it reached a 2024 high of 9.044 million bpd. The U.S. gasoline net import rate fell 273,000 bpd during the third week of March, with gasoline exports at 786,000 bpd and imports at 522,000 bpd.

Distillate fuel data was supportive, with distillate supplied to the U.S. market up 315,000 bpd to 4.028 million bpd -- the second highest weekly demand rate in 2024, while inventory was drawn down 1.185 million bbl to 117.337 million bbl. Yet, weak manufacturing activity has cast a pale over sentiment for the middle of the barrel.

At settlement, NYMEX May West Texas Intermediate futures settled down $0.27 at $81.35 bbl. ICE May Brent futures ended trade at $86.09 bbl, down $0.16 ahead of expiration Thursday afternoon, with the June contract settling the session at a $0.68 discount to the expiring contract.

NYMEX April RBOB futures settled down $0.0159 at $2.6847 gallon, with the May contract ending at a $0.0128 discount to the expiring contract. NYMEX April ULSD futures settled $0.0232 lower at $2.5986 gallon ahead of contract expiration Thursday afternoon, moving into a slight contango against May futures which settled at $2.6025 gallon.

The overall effect the collapse of the 1.6-mile Francis Scott Key Bridge early Tuesday, closing the Port of Baltimore, will have on fuel markets is currently unclear. Supply is not seen as an issue with five pipeline spurs off the Colonial Pipeline to Baltimore, nearby Curtis Bay, and the Baltimore-Washington International Airport having a combined throughput capacity of roughly 280,000 bpd. However, while the port is seen reopening as soon as May, the bridge could take years to replace, diverting highway traffic from a very busy commuter and commercial corridor. Commercial vehicles will be forced to add mileage to their traditional routes for several months or longer, increasing the demand for diesel fuel.

Brian L. Milne can be reached at brian.milne@dtn.com