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WTI Posts Modest Losses Ahead of EIA Data, OPEC+ Meeting
6/03 6:52 AM
WTI Posts Modest Losses Ahead of EIA Data, OPEC+ Meeting WASHINGTON, D.C. (DTN) -- Nearest delivery oil futures on New York Mercantile Exchange and Brent crude on Intercontinental Exchange posted modest losses in pre-inventory trade Wednesday, with preliminary data showing an unexpected decline in U.S. commercial crude oil supplies, while markets anticipate producers led by Saudi Arabia and Russia to extend their 9.7 million bpd supply-limiting agreement for at least another month. The American Petroleum Institute reported Tuesday that commercial crude oil supplies eased 483,000 bbl during the week-ended May 29 while inventories at the Cushing, Oklahoma hub dropped 2.2 million bbl. In the week prior, federal data showed inventories at Cushing tank farms fell 3.395 million bbl, sliding below the five-year-average to 53.462 million bbl. API data also showed gasoline supply rose 1.706 million bbl on week, while distillate stockpiles, including heating oil and diesel, jumped 5.917 million bbl. Demand for distillate fuels, mostly used in manufacturing, freight transportation and farming, is expected to stay depressed for months now, with the economy struggling to recover from coronavirus-lockdown compounded by social unrest across major US cities. The Atlanta Federal Reserve's GDP Now model projects the domestic economy to contract as much as 50% in the second quarter after falling 5% in 1Q. EIA will release its weekly oil inventory report later this morning. On economic data front, markets brace for monthly payroll data released by Automatic Data Processing at 8:15 AM ET, with consensus calling for nine million workers to have lost their jobs in May after nearly 20 million people were laid off in April. The speed and intensity of the layoffs and the closure of much of the retail sector has resulted in more than 40 million Americans filling for first-time unemployment benefits in the last ten weeks. Further weighing on the economy, National Guard troops have now been deployed across 29 states to quell protests in major American cities, protests that at times disintegrate into riots and looting, took to the streets for an eighth consecutive night to protest the killing of George Floyd by Minneapolis police on May 25. In early trading, NYMEX West Texas Intermediate July futures dipped $0.57 to trade near $36.24 bbl and Brent crude for August delivery traded down $0.56 to $39.01 bbl. NYMEX ULSD July futures traded 1.52cts lower at $1.0783 gallon and front-month RBOB July contract declined 1.18cts from near a 12-week high $1.1065 gallon. Separately, a key economic indicator out of China, Caixin PMI index released overnight, showed its economic activity returned back to growth in May, up to 54.5 vs. 47.6 expected. China's manufacturing sector has consistently outperformed expectations in the most recent weeks, indicating a strong rebound in the world's second largest economy. Overnight data out of Eurozone showed economic activity across 19-country bloc is also on the rise, albeit at much lower levels, with national stimulus began to kick in and European Central Bank's 750 billion bond buying program lent further support. Liubov Georges, 1.646.359.4088, liubov.georges@dtn.com, www.dtn.com. (c) Copyright 2020 DTN, LLC. All rights reserved.