WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange advanced in early trade Wednesday, with West Texas Intermediate up modestly as traders assess limited disruption to Gulf of Mexico oil production as Hurricane Ian draws closer to a Florida landfall later Wednesday and the U.S. dollar strengthened.
The Bureau of Safety and Environmental Enforcement Tuesday afternoon reported approximately 190,358 barrels per day (bpd) or 11% of current oil production and 8.56% of natural gas production in the Gulf of Mexico has been shut-in in preparation for Hurricane Ian. Based on available data, personnel have been evacuated from a total of 12 production platforms, which represents 2.3% of the 521 manned platforms in the Gulf.
British Petroleum, meanwhile, said Tuesday the company was working to redeploy offshore personnel to at least two offshore platforms, Na Kika and Thunder Horse, after determining conditions were safe. The company said Hurricane Ian "no longer poses a significant threat to our Gulf of Mexico assets."
Early morning gains for the oil complex came despite American Petroleum Institute data released late Tuesday that showed commercial crude and distillate fuel stocks increased last week, offsetting a surprise draw in gasoline inventories. Further details of the report showed commercial crude oil stocks posted a build of 4.150 million barrels (bbl) compared with an estimate for a 300,000-bbl decline. Stocks at the Cushing, Oklahoma, tank farm -- the NYMEX delivery point for WTI futures -- increased 357,000 bbl. Gasoline stocks dropped 1.048 million bbl in the week profiled, missing estimates for a build of 900,000 bbl. API reported distillate inventories increased 438,000 bbl in the week ended Sept. 23 versus calls for a 100,000-bbl draw.
Underpinning gains in the oil complex Wednesday morning are reports suggesting Russia is lobbying for a 1 million bpd cut in OPEC+ production when officials meet on Oct. 5. With an EU embargo on Russian oil exports set to come into force later this year, and Russia significantly underproducing its quota, Moscow has every incentive to implement a steep production cut. Saudi Arabia, the de-facto leader of the group, has indicated on multiple occasions that the kingdom stands ready to cut output to defend prices despite pleas from Western governments to release more supply into the market. Last month, OPEC+ agreed to cut oil production by 100,000 bpd in October, reversing a 100,000-bpd increase agreed upon for September.
Domestically, the U.S. Consumer Confidence Index, reported by the Conference Board on Tuesday, improved more than expected in September, supported by gains in the labor market and declining gasoline prices. The American Automobile Association reported the national gasoline price averaged $3.72 gallon on Monday, 14 cents less than a month ago while down substantially from mid-June when U.S. average reached a record high $5.016 gallon.
"Purchasing intentions were mixed, with intentions to buy automobiles and big-ticket appliances were up in September, while home purchasing intentions fell. Looking ahead, the improvement in confidence may bode well for consumer spending in the final months of 2022, but inflation and interest-rate hikes remain strong headwinds to growth in the short term," said Lynn Franco, senior director of economic indicators at The Conference Board.
Near 7:45 a.m. EDT, WTI November futures added $0.22 to trade near $78.72 bbl, reversing higher from Monday's $76.42 nine-month low on the spot continuous chart. Brent, the international crude benchmark listed on ICE, traded little changed near $86.32 bbl. NYMEX RBOB October futures added 0.37 cents to $2.4977 gallon, and the front-month ULSD contract rallied 3.84 cents to $3.2983 gallon.
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