10 Sep 2020 | 21:00 UTC — New York

OIL FUTURES: Product prices slip as US gasoline demand plumbs 2-month lows

Highlights

US gasoline draw erodes surplus, but demand weakest since mid-July

Commercial crude stocks climb 2.03 million barrels

US stimulus funding hopes dim after Senate votes down latest package

New York — Weakened US product demand weighed on NYMEX product futures Sept. 10 even as gasoline inventories showed signs of normalizing after a sizable draw during the week ended Sept. 4.

NYMEX October RBOB settled 2.16 cents lower at $1.0977/gal and October ULSD settled 2.37 cents lower at $1.0824/gal.

Weekly US gasoline demand slipped 400,000 b/d to 8.39 million b/d in the week ended Sept. 4, the lowest since the week ended July 12, US Energy Information Administration data showed Sept. 10. Distillate too, edged 200,000 b/d lower to 3.71 million b/d.

Still, key refined product stocks moved lower last week as lingering impacts of Hurricane Laura led to a sharp curtailment in refinery runs.

Total gasoline stockpiles declined 2.95 million barrels to 231.91 million barrels while distillate stocks slipped 1.68 million barrels to 175.85 million barrels.

The gasoline draw put inventories just 3% above the five-year average, the smallest supply overhang since mid-March. It was also the first time since the week ended March 20 that gasoline stocks did not trace a fresh five-year high.

USGC gasoline stocks are still ample at 12% above the five-year average, USAC stocks fell 1.8% behind average last week and Midwest inventories were 6.4% below normal.

NYMEX October WTI settled 75 cents lower at $37.30/b and ICE November Brent was down 73 cents on the day to settle at $40.06/b.

Commercial crude inventories climbed 2.03 million barrels in the week ended Sept. 4 to 500.43 million barrels, EIA said, putting them roughly 14% above the five-year average for this time of year.

Oil price declines extended in aftermarket trading after the US Senate, in a largely party-line vote, voted down the latest stimulus package.

"Increasingly dim, near-term stimulus prospects could be negative for affected subsectors on both [energy and non-energy] fronts," ClearView Energy Partners analysts said in a note. While the Republican-sponsored bill included few provision specific to the energy sector, even non-energy-focused stimulus could "potentially stave off or minimize energy demand declines amid the ongoing recession," the note explained.