Oil Slips Despite Crude Draw, Fed Rate Cut


   
Maria Eugenia Garcia
DTN Energy Editor

   HOUSTON, TX (DTN) -- Oil crude benchmarks edged down on Wednesday (9/17) 
ignoring data from the Energy Information Administration (EIA)and American 
Petroleum Institute showing draws in commercial crude oil and gasoline 
inventories, while distillates stocks build in the week ending September 12.

   A bearish tone prevailed in the market despite the Federal Reserve's 
afternoon announcement of its decision to cut interest rates for the first time 
in nine months.

   The front-month NYMEX WTI futures contract dropped by $0.51 to $64.01 bbl, 
and the November ICE Brent futures contract fell by $0.53 to $67.94 bbl. The 
October ULSD futures contract decreased by $0.0466 to $2.3469 gallon, while the 
ULSD futures contract for October delivery edged up by $0.0153 to $2.0263 
gallon.

   Meanwhile, the U.S. dollar weakened by 0.129 points to 97.990 against a 
basket of foreign currencies. 

   The EIA reported on Wednesday that U.S. commercial crude oil inventories, 
excluding the Strategic Petroleum Reserve, decreased by 9.3 million bbl to 
415.4 million bbl. That was 2.2 million bbl below the volume reported during 
the same week last year. This figure nearly three times higher than the 3.42 
million bbl draw the American Petroleum Institute reported Tuesday (9/17).

   EIA data also showed gasoline inventories dropped by 2.3 million bbl to 
217.6 million bbl, in the week ending September 12, which was 4 million bbl 
below the comparable week of last year. On Tuesday, API reported a 691,000 bbl 
draw for the same product in the profiled week.  

   Distillate fuel inventories rose for the third consecutive week by 4 million 
bbl to 124.7 million bbl, 500,000 bbl below the volume recorded in the same 
period of last year, the EIA data showed. The figure was above the 1.9 bbl 
build reported by API.

   Refinery utilization stood at 93.3% of capacity, down from 94.9% the prior 
week but above the 92.1% rate during the same period last year. Crude runs 
averaged 16.424 million bpd, down by 394,000 bpd week-on-week.

   Separately, as oil futures market participants expected, the Federal Reserve 
announced on Wednesday a 25-basis point cut in U.S. interest rates --the first 
since December of last year -- bringing benchmark rates set by the central bank 
into a 4.0%-4.25% range. However, oil futures reacted bearishly to the 
announcement, despite expectations that lower rates would stimulate economic 
growth and reduce the cost of financial services, even for the oil industry.




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