Top oil ETF slammed with record outflow as geopolitical fears fade (NYSEARCA:USO)

Crude oil futures closed lower Wednesday, as U.S. data showing a decline in weekly demand for gasoline outweighed support from the first drop in commercial crude supplies in five weeks.

Commercial crude oil stocks unexpectedly pulled back sharply by 6.4M barrels to 453.6M barrels in the week ended April 19 and were ~3% below the five-year average for the time of year, the Energy Information Administration reported, but U.S. implied gasoline demand fell by 239K bbl/day to 8.42M bbl/day, ~1.1M bbl/day below levels seen last year, while gasoline inventories fell by ~600K bbl, with inventories 4% off the seasonal five-year average.

The large crude draw was the result of very high crude exports, but it could be a one-off, as preliminary tanker tracking data this week shows lower exports, UBS analyst Giovanni Staunovo says.

But the implied gasoline demand figures combined with the smaller than expected gasoline supply draw “poured some cold water on the market… as worries of a persistently tight physical fuel market are beginning to subside,” Sevens Report Research co-editor Tyler Richey told Marketwatch.

Front-month Nymex crude (CL1:COM) for June delivery closed -0.6% to $82.81/bbl, and front-month June Brent crude (CO1:COM) finished -0.4% to $88.02/bbl.

ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (NRGU), (USOI)

U.S. Oil Fund (USO), the biggest oil ETF, posted its largest daily outflow on record Wednesday, as crude prices lost some of the geopolitical premium that had built up from worries over a wider Middle East war.

According to Bloomberg, the $376M withdrawal topped the previous one-day record of $323M set in 2009; after the pullback, USO has $1.3B in assets, which still makes it the largest oil ETF.