Oil Mixed, Pull Back From Highs

WASHINGTON (DTN) -- New York Mercantile Exchange oil futures and Brent crude on the Intercontinental Exchange posted various results in Wednesday afternoon trade, with West Texas Intermediate and Brent settling near flat for a third straight session. This came after U.S. inventory data showed building crude supply and hefty draws in petroleum products during the week-ended Oct. 4, while Federal Reserve minutes indicated the market expects more interest rate cuts than the central bank can deliver.

Falling from session highs, NYMEX November WTI futures settled down $0.04 at $52.59 per barrel (bbl), and the ICE December Brent contract ended the session $0.08 higher at $58.32 bbl. NYMEX November ULSD futures ended the session 0.92 cents higher at a $1.9193 gallon settlement and the November RBOB contract added 0.62 cents to settle at $1.5871 gallon. Crude contracts erased earlier gains to end the session near flat following the release of Federal Reserve minutes that suggested a growing division among members about the future path of monetary policy.

Fed minutes showed "a few participants" during the September meeting saw prices in futures markets "point[ing] to greater provision of accommodation at coming meetings than they saw appropriate." The central bank raised the issue of tariffs and their damaging effect on business activity multiple times during its September meeting, highlighting downside risks for the economy.

Mixed session also comes ahead of the key round in U.S.-China trade talks scheduled for Thursday and Friday in Washington, D.C. Earlier reports indicate China is prepared to accept a partial trade deal with the United States as long as no more tariffs are imposed by President Donald Trump. According to the headlines, agreement would not include major issues of government subsidies and intellectual property protection from the Chinese government. The U.S. position on a partial trade deal remains unclear.

Oil futures rallied more than 2% in midmorning Wednesday trade after U.S. inventory data showed hefty draws in gasoline and distillate supply last week, while demand for motor gasoline held higher and oil refinery run rates continued their seasonal downtrend. Data also detailed a rebound in U.S. crude oil exports last week, while imports declined. On the bearish side, domestic crude production hit an all-time high 12.6 million barrels per day (bpd) as of Oct. 2, gaining 200,000 bpd from week prior.

Liubov Georges can be reached at liubov.georges@dtn.com

(BAS)

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