ULSD Softens, Oil Prices Edge Up as U.S. Fuel Stocks Grow


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- ULSD futures continued to soften Thursday (12/4) morning 
while crude oil and gasoline futures held to yesterday's gains following the 
Energy Information Administration's report of across-the-board builds in U.S. 
oil and fuel inventories last week.

   NYMEX ULSD futures for January delivery traded around the $2.3 gallon mark 
for a second day, sliding $0.0044 to $2.2964 gallon. Front-month RBOB futures, 
meanwhile, edged up $0.0065 to $1.8337 gallon.

   WTI futures for January delivery rose $0.38 bbl to $59.33 bbl, and ICE Brent 
for February delivery advanced $0.33 to $63 bbl.

   The U.S. Dollar Index was little changed, up 0.073 points to 98.927 against 
a basket of foreign currencies.

   The EIA on Wednesday (12/3) reported increases in crude and transportation 
fuel inventories in the week ended November 28. Commercial crude oil stocks 
rose by 600,000 bbl, and distillate fuel oil and gasoline inventories expanded 
by 2.1 million bbl and 4.5 million bbl, respectively, the agency said.

   While fuel inventories typically rise this time of year, the builds helped 
alleviate some pressure off diesel futures prices, which have slumped 15% since 
peaking in mid-November.

   The European Union's plan to ban imports of fuels refined from Russian crude 
oil -- amid globally low refinery runs, attacks on Russian refineries and tight 
inventories --  sparked a diesel rally in late October. Prices reversed course 
with emerging prospects for Russia-Ukraine peace in mid-November, although the 
U.S.-led initiative on that has not brought any results.

   The overall market outlook for crude oil remains dire, as supply additions 
are expected to continue to outpace demand growth next year. The geopolitical 
risk premium helped support prices, but supply outages from attacks on export 
infrastructure have so far been short-lived.

   Growing U.S. pressure on Venezuela and an increasingly bellicose tone from 
the administration added to supply concerns. Last week, U.S. President Donald 
Trump announced the U.S. will expand the scope of the strikes it has been 
carrying out for three months to "land operations" in Venezuela. Last month, 
crude oil exports from the country surpassed 900,000 bpd, according to tanker 
tracking data.




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