DTN Oil

WASHINGTON (DTN) -- Nearby delivery month oil futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange rallied in afternoon trade Tuesday. Front-month West Texas Intermediate settled at a two-week high $84.15 barrel (bbl) supported by a weakening U.S. Dollar Index and low inventory level at the Cushing hub in Oklahoma, as investors positioned ahead of the weekly release of U.S. stock data. The consensus is gasoline and distillate fuel inventories fell last week.

Gains in WTI futures outpaced those for the international crude benchmark Brent contract, adding more than $2 bbl on the session. ICE Brent January futures advanced $1.35 for an $84.78 bbl settlement. NYMEX RBOB December futures spiked 5.3 cents or 2.2% to $2.3752 gallon and front-month NYMEX ULSD futures advanced 4.1 cents to $2.5081 gallon.

U.S. commercial crude oil inventories likely increased 1.3 million bbl in the week ended Nov. 5, although estimates ranged from a decrease of 4 million bbl to an increase of 3.9 million bbl. Stockpiles at Cushing -- the delivery point for the WTI contract -- will likely be the focus of this week's inventory report after sustaining a destocking pattern for over a month. In the week ended Oct. 29, crude oil inventories in Cushing were 24 million bbl, meaning available storage capacity was about 34%. Gasoline stockpiles are expected to have fallen by 600,000 bbl from the previous week, according to analysts, and distillate stocks likely declined by 1.2 million bbl. Refinery use likely rose by 0.7% from the previous week to 87% of capacity.

The American Petroleum Institute will publish stock estimates at 4:30 p.m. EST, followed by official data from the U.S. Energy Information Administration on Wednesday morning.

DTN Refined Fuels Demand data showed gasoline use in the U.S. increased 2% from the previous week during the first week of November and diesel demand gained 3.1%. Total gasoline demand is down only 0.2% compared to the same week in 2019 and diesel consumption is up 7.1% relative to the same week in 2019, strengthening further on a relative seasonal basis after being up 4.4% compared to 2019 levels.

Internationally, the Organization of the Petroleum Exporting Countries and ten producers outside of the cartel led by Russia fell short of their planned production increase last month, with about half of the coalition members unable to raise output, hamstrung with operational issues and years of underinvestment. OPEC pumped 27.5 million barrels per day (bpd) in October, a rise of 190,000 bpd from the previous month, but still about 65,000 bpd below the quota allowed under their joint agreement. OPEC+ deal allows for a 400,000-bpd monthly increase that is shared among all 23 members of the alliance.

The biggest decline was posted by Nigeria, down 70,000 bpd from the previous month to a five-month low 1.37 million bpd with the country's key pipeline facing persistent sabotage. Angola has also been unable to reverse a sharp decline in its oil production. In October, production slipped 40,000 bpd to 1.11 million bpd, well below its quota of 1.362 million bpd. Production declines in smaller members offset gains in Saudi Arabia, Kuwait and Iraq, with all three Gulf states believed to have most of OPEC's spare capacity. Saudi Arabia saw the biggest increase, month-on-month, adding 130,000 bpd from the previous month to 9.79 million bpd in October, the highest level since April 2020 amid strengthening demand for its crude.

Outside the cartel, Russia was the largest producer, with output standing at 9.96 million bpd -- well above its quota of 9.81 million bpd, and the highest output rate since April 2020, the survey showed.

Missed production targets from OPEC+ coincide when global oil consumption has exceeded crude production for five consecutive quarters, according to U.S. Energy Information Administration. During this period, total petroleum stocks among countries in the Organization for Economic Cooperation and Development fell by 424 million bbl -- from 9% above the five-year average in June 2020 to 7% below the five-year average at the end of September.

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