Market Report & Analysis for 6/13/2019 Morning Edition

by | Jun 13, 2019 | EMI, Fuels & Markets, FutureRack, Industry News

Morning Market Overview

Oil Futures Plunge on US Crude Stock Build, Demand Concerns WASHINGTON, D.C. (DTN)

Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange moved sharply lower early Wednesday in response to bearish industry data detailing a much larger-than-expected build in U.S. inventories, while intensifying concerns over lost demand is souring market sentiment.

At 9 AM ET, NYMEX July West Texas Intermediate was down $1.35 near $51.95 bbl, with Intercontinental Exchange August Brent $1.45 lower near $60.80 bbl. NYMEX July RBOB futures slid 3cts to near $1.7265 gallon, with the July ULSD contract 2.25cts lower near $1.7995 gallon. Oil futures nosedived Wednesday morning after American Petroleum Institute reported a surprise build in domestic crude oil inventories and a larger- than-expected increase in gasoline stockpiles.

API reported crude supplies rose 4.85 million bbl in the first week of June, missing calls for a decline of 600,000 bbl. Trade sources said API reported gasoline inventories increased 829,000 bbl, above an expected 500,000 bbl increase while distillate inventories slid 3.46 million bbl, contrary to an expected build of 1 million bbl.

Energy Information Administration will publish official government figures on U.S. petroleum stockpiles at 10:30 AM ET. Investors remain fixated on the demand side of the oil market, as the U.S.–China trade war continues to cloud the global economic growth outlook and fuel consumption requirements.

Reuters reported China’s crude oil imports tumbled 11% in May to average 9.47 million bpd, in line with a broader decline in Chinese imports. According to data from China’s General Administration of Customs, the country’s imports registered an 8.5% year- on-year decline in May, pointing to weakness in its domestic economy. U.S. President Donald J. Trump said on Monday he would immediately raise additional tariffs on China, if he cannot make progress in trade talks with Chinese President Xi Jinping at the G20 Summit later this month.

Domestically, EIA on Tuesday revised down its forecast for world oil consumption for both 2019 and 2020 from month prior, with global supply projected to outpace demand by 26,000 bpd in 2020. “Demand-side concerns became the most salient issue during the past month and contributed to volatility and price declines for risk assets such as commodities and equities” said EIA in its Short-term Energy Outlook released on Tuesday.

In financial markets, U.S. futures Wednesday morning pointed to opening declines of 0.2% for the S&P 500 and the Dow Jones Industrial Average, extending Tuesday’s modest losses.

Both indexes fell less than 0.1% on Tuesday, weighed down by lingering trade tensions and concerns over the direction of Federal Reserve monetary policy.