DTN Oil

CRANBURY, N.J. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange settled Tuesday's session mixed, and the Brent contract on the Intercontinental Exchange ended little changed, with technical factors at play in driving the price action.

NYMEX October West Texas Intermediate futures ended a seven-session advance Tuesday ahead of the contract's expiration Wednesday afternoon, settling down a modest $0.28 at $91.20 bbl after reversing lower from a $93.74 high, matching the November 2022 high. November WTI futures narrowed its discount to the expiring contract by $0.18 with a $90.48 bbl settlement. ICE November Brent crude futures ended down $0.09 at $94.34 bbl, reversing lower from a $95.96 bbl new 10-month high.

Traders faded gains in the overbought contracts ahead of weekly supply data from the American Petroleum Institute for release at 4:30 PM ET, with market expectations for crude and oil products widely mixed, according to a Wall Street Journal survey.

A consensus of analysts surveyed by WSJ expects a 1 million bbl drawdown from commercial crude inventory to have occurred during the second week of September as U.S. exports are expected to have reaccelerated after falling 1.84 million bpd to 4.932 million bpd in the previous week, according to statistics from the Energy Information Administration. Coupled with a surge in imports, which reached a 7.582 million bpd four-year high weekly import rate, the net import rate surged to 4.492 million bpd during the week-ended Sept. 8, EIA data shows.

U.S. refinery run rate is expected to have declined by 0.6% to 93.1% of nameplate capacity during the week profiled.

Analysts expect gasoline inventory to have increased by 500,000 bbl following an EIA-reported 5.561 million bbl build in the week prior, with gasoline stocks on Sept. 8 at a 220.307 million bbl 11-week high, 7.3 million bbl or 3.4% above the stock level in the comparable week a year ago.

Domestic distillate stocks are expected to have been drawn down a modest 200,000 bbl last week but would follow five consecutive weekly builds through Sept. 8 that added 7.09 million bbl or 6.1% to inventory from Aug. 4. At 122.533 million bbl, distillate inventory is 17.3 million bbl below the five-year average, EIA data shows.

NYMEX October ULSD futures retraced Monday's losses in an inside-up trade session, settling $0.0856 higher at $3.3739 gallon. NYMEX October RBOB futures settled lower for a third session, down $0.0398 to $2.6581 gallon.

Despite the mixed session, oil futures are trending higher on forecasts for a tight global supply-demand disposition during the fourth quarter amid OPEC+ production cuts. Saudi Arabian Energy Minister Prince Abdulaziz bin Salman said Monday in Calgary at the World Petroleum Congress that the decision to reduce its crude production by 1 million bpd in the second half of 2023 is to ensure market order and reduce volatility, denying that the kingdom's production policy is to drive oil prices higher. Russia joined Riyadh in reducing available supply, with Moscow holding back 300,000 bpd of oil exports through year-end. The International Energy Agency recently projected the supply curtailment would lead to a 1.2 million bpd global supply shortfall during the fourth quarter.

Tuesday's mixed session comes ahead of the Federal Open Market Committee's decision on interest rates, with the market widely anticipating no change in the federal funds rate, now in a 5.25% by 5.5% target range. CME Group's FedWatch Tool finds investors expecting the central bank to hold the key overnight bank borrowing rate unchanged through the middle of 2024.

Climbing energy costs goosed inflation higher in August, and vehicle costs are set to rise amid a strike declared by the United Auto Workers against the Big Three Detroit auto manufacturers -- General Motors, Ford, and Stellantis. Now in its fifth day, UAW has targeted work stoppages at the Big Three's most profitable plants. UAW leader Shawn Fain said work stoppages would expand at noon Friday (9/22) if substantial progress was not made in contract negotiations with the automakers.

Brian L. Milne can be reached at brian.milne@dtn.com