WTI, ULSD End Lower as Weak Demand Undercuts Crude Draw


   
   CRANBURY, N.J. (DTN) -- The nearby West Texas Intermediate and ULSD futures 
contracts on the New York Mercantile Exchange and Brent futures on the 
Intercontinental Exchange settled Wednesday's session lower as an unexpected 
and large drawdown from U.S. commercial crude inventory was countered by weak 
domestic demand for finished fuels.

   Midmorning Wednesday, Energy Information Administration reported a 6.368 
million bbl decline in commercial crude stocks to 453.625 million bbl during 
the week-ended April 19 -- the first drawdown since the second week of March. 
The stock draw was realized because of a surge in U.S. crude exports, which 
jumped 453,000 bpd to a 5.179 million bpd 2024 high.

   Fuel demand, however, was underwhelming, with gasoline supplied to the U.S. 
market down 239,000 bpd last week while distillate fuel pushed to the primary 
market fell 114,000 bpd. Domestic demand has trailed the 2023 pace so far this 
year, but the decline accelerated in April. During the four weeks ended April 
19, EIA shows gasoline supplied to the U.S. market 332,000 bpd or 3.7% below 
the comparable period in 2023 and distillate fuel suppled down 449,000 bpd or 
11.6%.

   A slump in U.S. manufacturing activity highlighted by preliminary PMI data 
from S&P on Tuesday showing no growth in April offers evidence for weak demand 
for diesel fuel. So does a prolonged recession in freight shipments now two 
years old.

   American Trucking Associations' Chief Economist Bob Costello on Wednesday 
said, "Tonnage in March suggests that truck freight volumes remain lackluster, 
and it is clear the truck freight recession continued through the first 
quarter. In the first three months of 2024, ATA's tonnage index contracted 0.8% 
from the previous quarter and declined 2.4% from a year earlier, highlighting 
ongoing challenges the industry is navigating."

   Wednesday morning, the U.S. Census Bureau reported new orders for 
manufactured durable goods were better than expected in March with a 2.6% 
monthly gain, but shipments of durable goods declined for the third out of the 
past four months, aligning with weak freight movement. Might the long-waited 
end to the freight recession be nearing?

   NYMEX May ULSD futures settled $0.0293 lower at $2.5499 gallon, and June WTI 
futures fell $0.55 with a $82.81 bbl settlement. ICE June Brent crude eased 
$0.40 with a $88.02 bbl settlement, turned lower after testing resistance at 
the $88.85 bbl 20-day moving average.

   NYMEX May RBOB futures settled $0.0090 higher at $2.7343 gallon after 
finding price support just below $2.71.

    

    

   Brian L. Milne, 1.732.768.0260, brian.milne@dtn.com, www.dtn.com.




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