Crude oil weekly recap, Apil 28 – May 2

Crude oil was pressured by a second week of record-high supplies in the US. Positive data from the worlds top economy stoked bullish sentiment, after poor Chinese figures. Libyan exports set to rise, while the conflict in Ukraine continued to escalate.

West Texas Intermediate futures for delivery in June closed for $99.76 per barrel on the New York Mercantile Exchange on Friday, adding 0.34% for the session, daily prices between $98.74 and $100.14 per barrel. The US crude benchmark lost 0.32% on Thursday, after dropping 1.52% the previous day with news of record-high inventories in top consumer US.

Meanwhile on the ICE in London, Brent futures for settlement in June closed for a 0.77% gain at $108.59 per barrel, prices ranging from $107.60 to $108.99 per barrel. Brent’s premium to WTI stood at $8.83. The European brand fell by 0.29% on Thursday, after further 0.80% the prior session.

Wednesdays government report on US oil inventories for the week ended April 25th revealed stockpiles of crude oil were at the all-time-high of 399.4 million barrels, registering a growth of 1.698 million barrels, though falling short of expectations. Domestic production recorded insignificant drops and averaged 8.352 million barrels per day, while imports stood at 7.412 mbd, down from last week’s 7.729 million barrels daily.

Motor gasoline supplies have increased by 1.564 million barrels, thrashing expectations of a 0.6 million barrels decrease, while distillates gains were at 1.936 million barrels, well-ahead of a projected 0.583 million barrel rise. The increase in refined products comes in-line with higher than usual for the season refinery utilization rate, which stood at 91.0% for a second week. Gasoline production picked-up pace to settle at 8.693 million barrels per day, while distillates remain at 4.9 million barrels daily.

Crude in storage at Cushing, the delivery point for WTI, fell by 0.6 million barrels to 25.4 million barrels. Hubs at the Gulf Coast gained 5.7 million barrels to record at 215.3 million barrels, following the expected outflow from PADD2, where Cushing is located, to refineries on the coast.

“Inventories are clearly starting to have an impact,” said for Bloomberg Michael McCarthy, chief strategist at CMC Markets in Sydney. “It’s the supply side that’s driving oil prices at the moment.”

Demand and supply outlooks

Friday saw employment figures for April in the US blast past forecasts to register readings unseen in years. Unemployment rate stood at 6.3% – the lowest since the very start of the financial crisis in Autumn 2008. Meanwhile, nonfarm payrolls added 288 000 for the month of April, marking the highest rise since May 2010.

Previously, consumer spending and improving factory activity in the US had further backed-up the Fed’s confidence in the recovering economy, improving oil demand outlooks in the worlds largest economy.

Meanwhile, Chinese government data on manufacturing output for April revealed a worse-than-expected PMI at 50.4. The figure does, however, improve on last month’s 50.3 reading, and is still above the “50″ mark, which translates into growth. Next week HSBC’s final standing for manufacturing PMI for China will be released. The preliminary report put the figure at 48.3, signaling contraction.

Elsewhere, the Zueitina oil-exporting port in Libya began loading its first tanker yesterday. The terminal was closed for nearly a year due to a rebel insurrection. News of the reopening pressured crude on Monday, Brent posting its biggest daily drop in a month.

Libya’s crude oil exports slid to 250 000 barrels daily, from 1.4 million a year ago, since militants took control of four eastern ports last year.

In Europe the crisis in Ukraine is hardly deescalating, supporting the risk premium for oil. Kiev reported dozens of deaths following the anti-terrorist operation in Slaviansk and clashes between protesters in Odessa. Meanwhile, Acting President Oleksandr Turchynov decreed the reinstatement of military conscription on Thursday, in a bid to boost Ukraine’s standing forces. Earlier Moscow assured it has not intention of invading, but NATO and Kiev reported that Russia still has 40 000 troops near the border.