DTN Weekly Oil Update

VIENNA (DTN) -- West Texas Intermediate futures closest to expiration on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange started the week up more than $1 per barrel (bbl) ahead of the July 4 weekend which traditionally marks peak seasonal fuel demand in the U.S. AAA expects a record number of travelers this Independence Day week, propelled by a 5% year-on-year increase in road travel. Demand woes are persisting, however, as recent manufacturing data disappointed once more.

The Energy Information Administration on Wednesday reported commercial crude oil inventories expanding by 3.6 million bbls, and gasoline stocks adding some 2.7 million bbls in the last week of June. Weak manufacturing and freight activity have been denting fuel demand, with 1.5% less gasoline and 3.8% less distillate fuel oil supplied to domestic markets over the past four weeks compared to the same period last year. The Institute of Supply Management on Monday released their June U.S. manufacturing PMI, which at 48.5 slid even deeper into contraction.

Manufacturing data out of China released over the weekend, meanwhile, was mixed. While the Caixin manufacturing PMI in June rose to 51.8, the highest in two years, official data indicated no change from May at 49.5. Aside from the brief respite in March and April, the state manufacturing PMI has been stuck below 50 since October. Chinese oil demand has largely trailed expectations so far this year, with official customs data recently showing a year-on-year drop in refining activity.

Near 10:30 a.m. EDT, WTI futures for August delivery were trading near $81.85 bbl, up $0.31, and Brent for September delivery hovered around $85.33 bbl, up $0.33. RBOB for August delivery was up $0.0265 gal near $2.5280, and ULSD nearest delivery gained $0.0246 gal, trading near $2.5577.

Karim Bastati can be reached at karim.bastati@dtn.com