DTN Oil

CRANBURY, N.J. (DTN) -- The nearby West Texas Intermediate (WTI) and ULSD futures contracts on the New York Mercantile Exchange (NYMEX) and Brent futures on the Intercontinental Exchange settled Wednesday's session lower as an unexpected and large drawdown from U.S. commercial crude inventory was countered by weak domestic demand for finished fuels.

Midmorning Wednesday, Energy Information Administration (EIA) reported a 6.368 million barrel (bbl) decline in commercial crude stocks to 453.625 million bbl during the week ended April 19 -- the first drawdown since the second week of March. The stock draw was realized because of a surge in U.S. crude exports, which jumped 453,000 barrels per day (bpd) to a 5.179 million bpd 2024 high.

Fuel demand, however, was underwhelming, with gasoline supplied to the U.S. market down 239,000 bpd last week while distillate fuel pushed to the primary market fell 114,000 bpd. Domestic demand has trailed the 2023 pace so far this year, but the decline accelerated in April. During the four weeks that ended April 19, EIA shows gasoline supplied to the U.S. market 332,000 bpd or 3.7% below the comparable period in 2023 and distillate fuel supply down 449,000 bpd or 11.6%.

A slump in U.S. manufacturing activity highlighted by preliminary PMI data from S&P on Tuesday showing no growth in April offers evidence for weak demand for diesel fuel. So does a prolonged recession in freight shipments now two years old.

American Trucking Associations' chief economist Bob Costello on Wednesday said, "Tonnage in March suggests that truck freight volumes remain lackluster, and it is clear the truck freight recession continued through the first quarter. In the first three months of 2024, ATA's tonnage index contracted 0.8% from the previous quarter and declined 2.4% from a year earlier, highlighting ongoing challenges the industry is navigating."

Wednesday morning, the U.S. Census Bureau reported new orders for manufactured durable goods were better than expected in March with a 2.6% monthly gain, but shipments of durable goods declined for the third out of the past four months, aligning with weak freight movement. Might the long-awaited end to the freight recession be nearing?

NYMEX May ULSD futures settled $0.0293 lower at $2.5499 gallon, and June WTI futures fell $0.55 with a $82.81 bbl settlement. ICE June Brent crude eased $0.40 with a $88.02 bbl settlement, turned lower after testing resistance at the $88.85 bbl 20-day moving average.

NYMEX May RBOB futures settled $0.0090 higher at $2.7343 gallon after finding price support just below $2.71.

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