Crude extends slide following surprise US inventory build

Crude oil futures extended decline Aug. 4 on the heels of an unexpected build in US crude inventories.

NYMEX September WTI settled down $2.41 at $68.15/b Aug. 4, and ICE October Brent declined $2.03 to $70.38/b.

Total US commercial crude oil stocks climbed 3.63 million barrels to 439.23 million barrels in the week ended July 30, US Energy Information Administration data showed Aug. 4. The build narrowed the deficit to the five-year average to around 6%, the smallest since the week ended June 18.

The build came as a surprise to markets that were largely expecting US inventories to continue a tightening trend.

American Petroleum Institute data released late-Aug. 3 showed a US crude draw of 879,000 barrels, while analysts surveyed by S&P Global Platts on Aug. 2 had pointed to a four-million barrel draw over the period.

The crude build comes as exports fell 590,000 b/d to 1.9 million b/d, a 12-week low, while total refinery crude demand edged 50,000 b/d higher, but still fell more than 5.5% behind the five-year average.

NYMEX September RBOB settled 2.08 cents lower at $2.2500/b and September ULSD declined 5.23 cents to $2.0741/gal.

The relatively modest slide in RBOB futures was likely due to a larger-than-expected 5.29 million-barrel draw in US gasoline stocks last week -- the bulk of which was realized on the US Atlantic Coast. USAC stocks are now the tightest since May at 6.5% below the five-year average, out from just 0.7% the week prior.

Adding to pressure was an ADP jobs report released Aug. 4 showing US payrolls added just 330,000 jobs in July, well under market expectations of around 683,000. The official Labor Department unemployment report for July is expected Aug. 6.

"The big miss with the ADP raised concerns that the delta variant is having a bigger impact on the economy," OANDA senior market analyst Edward Moya said in a note. "The labor market recovery is extremely uneven and suggests the economy continues to struggle in matching individuals up with the current job vacancies."

The ADP report comes on the heels of data from the Institute of Supply Management release Aug. 2 showing a slowdown in US manufacturing activity, with national factory activity falling from 60.6 in June to 59.5 in July, its lowest since January.