Oil complex weakens on rising US crude production
New York (Platts)--3Jun2015/430 pm EDT/2030 GMT
The oil complex settled lower Wednesday weighed down by US Energy
Information Administration data showing record-high crude production and
a large decline in implied gasoline demand.
NYMEX July crude settled $1.62 lower at $59.64/b, while ICE July Brent
settled down $1.69 at $63.80/b.
In refined product activity, NYMEX July ULSD settled 5.37 cents lower
$1.8918/gal and NYMEX July RBOB settled down 1.95 cents at $2.0453/gal.
Daily production rose 20,000 b/d last week to 9.586 million barrels,
highest level going back to at least 1983. The weekly increase was
limited to Alaskan output, while lower 48 production was unchanged at
9.079 million b/d.
"The focus was on the strong production instead of the downdraft in
gasoline inventories," Jim Ritterbusch, president of Ritterbusch &
Associates, said.
Gasoline stocks decreased 334,000 barrels last week to 220.293 million
barrels, though implied gasoline demand plunged 756,000 b/d to to 8.978
million b/d.
Crude stocks fell 1.948 million barrels to 477.415 million barrels for
the week ended May 29, though analysts surveyed by Platts Monday
expected crude stocks decreased 2.4 million barrels.
"The crude inventory draw was underwhelming," Andy Lipow, president at
Lipow Oil Associates, said.
At Cushing, Oklahoma -- delivery point for the NYMEX crude futures
contract -- stocks fell for the sixth consecutive week, as Gulf Coast
refiners draw more barrels and the economic incentive to store crude
disappears.
"Contango in the market no longer justifies people holding onto their
inventory, so we'll continue to see draws in Cushing," Lipow said.
Another factor behind Cushing's reduction last week was wildfires in
Alberta, Canada, which shut in heavy oil production replaced by Cushing
barrels out of storage, he said.
--Geoffrey Craig,
geoffrey.craig@platts.com
--Edited by Richard Rubin,
richard.rubin@platts.com
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