DTN Oil
Oil Eyes Second Week of Losses on Dampened Growth Prospect
VIENNA (DTN) -- West Texas Intermediate futures closest to expiration on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange steadied Friday morning but were on track to post a second consecutive weekly decline. Oil futures slumped after data released this week pointed to weak fuel demand, persistent inflationary pressures and a slowdown in Chinese manufacturing activity.
After two months of back-to-back growth, the Chinese Manufacturing Purchasing Managers' Index, released overnight by China's National Bureau of Statistics, in May slid back into contraction territory, amplifying reemerging concerns over a stalling recovery of an economy that is expected to drive around a third of oil demand growth this year. The Caixin manufacturing PMI for May is scheduled for release Sunday.
Weekly inventory data released by the U.S. Energy Information Administration yesterday showed commercial crude oil stocks declined 3.7 million bbls in the week ending May 24 as refining activity picked up the pace, with crude oil throughput on a weekly average surpassing 17 million bpd for the first time since 2019. Oil product stocks, on the other hand, unexpectedly expanded last week. The EIA reported nationwide gasoline inventories added 2 million bbls in the reviewed week, and distillate fuel oil inventories grew 2.6 million bbls, contributing to the sizable 12.7 million bbl build in total commercial stocks. Fuel demand continued to trail year-ago levels, with 1.7% less gasoline and 4% less distillate fuel oil supplied to US markets over the past four weeks compared to the same period last year.
The OPEC+ coalition is expected to extend production cuts into the second half of the year at their next meeting in Vienna on Sunday. Notorious overproducers in the group less keen on output curtailments may still support an extension on paper, but the follow-through is what will ultimately matter to physical markets in the second half of 2024.
Near 8:30 a.m. EDT, WTI futures for July delivery were flat near $77.89, and Brent for July delivery was down $0.13 near $81.73 bbl. RBOB for June delivery gained $0.0138 to $2.4184 gallon, and ULSD for June delivery traded near $2.3679 gallon, down $0.0015.
Karim Bastati can be reached at karim.bastati@dtn.com