WTI Tops $80 Bbl, Products Rally on Hope for Demand Bounce

Brian L Milne
By  Brian L. Milne , DTN Refined Fuels Editor

CRANBURY, N.J. (DTN) -- Oil futures nearest to delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange advanced on the session and the week Friday as a weakening conviction over fuel demand following disappointing data so far in the second quarter gave way following supportive statistics out of China.

China's National Bureau of Statistics overnight released data detailing a 6.7% year-on-year expansion in industrial production in April that topped market expectations following annual growth in March of 4.5%. Beijing has again turned to stimulating the country's manufacturing sector after sluggish economic growth so far this year amid a collapse in its property sector and weak consumer spending.

The crude and ULSD contracts settled at May highs and RBOB futures at an 11-day high after bouncing off multiweek lows plumbed Wednesday following a test of key technical support levels. RBOB futures registered the strongest gains in the session and week, up $0.0745 per gallon or 3% from the prior Friday. The advance comes ahead of the Memorial Day weekend, with AAA projecting a record 38.4 million people traveling more than 50 miles from their home during the five-day holiday that begins May 23.

June RBOB futures settled $0.0364 higher on the session at $2.5742 gallon following a recovery from a $2.4427 11-week low on the spot continuous chart.

June ULSD futures advanced $0.0426 in the session with a $ 2.4863 per gallon settlement, accounting for most of the $0.0519 or 2.1% weekly advance. The ULSD contract slumped to a $2.3764 10-1/2 month low on a spot continuous basis amid an ongoing slump in U.S. manufacturing activity and freight hauling.

West Texas Intermediate futures with June delivery were boosted by midweek data from the Energy Information Administration showing a second weekly drawdown in commercial crude inventory through May 10 that widened the stock deficit against the five-year average by more than 4 million bbl to 18.573 million bbl or 3.9%. The draw was spurred in large part by a pickup in domestic refiner demand, with refinery crude inputs up 307,000 bpd or 2% during the week ended May 10 at a 16.255 million bpd 17-week high.

WTI futures topped $80 bbl for the first time in May on Friday, up $0.83 at $80.06 bbl, while advancing $1.80 or 2.3% from the prior Friday. On Wednesday, WTI futures fell to a $76.70 bbl 11-week low.

July Brent crude also advanced from an 11-week low of $81.05 bbl on Wednesday, settling Friday's session up $0.71 at $83.98 bbl while advancing $1.19 or 1.4% this week.

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

Brian Milne