NYMEX WTI Reaches 2-Mo High on Large Crude, Gasoline Draws

API data reported on Tuesday nationwide crude supplies dropped 7.688 million bbl last week — more than three times estimates for a 2 million bbl draw, while also detailing larger-than-expected draws in refined fuels inventories from the previous week. Gasoline stockpiles plunged 5.308 million bbl versus estimates for a decrease of 900,000 bbl build, while distillate inventories dropped 3.453 million bbl, more than twice calls for a draw of 1.2 million bbl.

Confirmation of the steep draws in official data due out Wednesday morning from the U.S. Energy Information Administration would send a bullish signal to the market just as the economy is set to accelerate.

State reopenings and vaccine rollouts are expected to add to the bullish momentum in the coming months, with New York, New Jersey, and Connecticut set to fully reopen their economies in less than two weeks that would further boost U.S. gasoline demand. Recent data from the EIA show four-week average gasoline use already reached the highest level since late August 2020 at 8.827 million barrels per day.

In financial markets, stocks on Wall Street position for modest gains and the U.S. Dollar Index declined marginally ahead of the slew of employment data in the United States, starting with ADP’s employment report at 8:15 a.m. ET, followed by jobless claims on Thursday and concludes with Friday’s nonfarm national payroll report, which is expected to show a headline increase of 1 million new jobs. Additionally, investors will keep a close eye on Institute of Supply Management gauge for business activity in service industries that are by far the largest component of the U.S. economy, with expectations for further monthly improvement to 64.2 reading. Earlier this week, ISM data showed manufacturing activity unexpectedly decreased 4% in April to a 60.7 reading despite strong demand.

In Europe, a stronger-than-expected reading of growth in the economy’s manufacturing and services sectors further boosted expectations for a strong rebound of the global economy in the second half of the year. IHS Markit’s final Composite Purchasing Manager’s Index rose to 53.8 in April from March’s 53.2, as factory activity surged to a record high, boosted by burgeoning demand and driving a rise in hiring.

This week, European Union proposed plans to allow entry into the bloc for fully vaccinated travelers as early as this month. If approved, the new rule would replace a ban on all nonessential travel to the EU. This certainly bodes well for jet fuel demand that’s been battered by the pandemic.

Liubov Georges can be reached at liubov.georges@dtn.com

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