Oil Futures Settle Sharply Lower

CRANBURY, N.J. (DTN) -- New York Mercantile Exchange nearest delivered oil futures and Intercontinental Exchange Brent futures settled sharply lower Wednesday, with the West Texas Intermediate, Brent and ULSD contracts ending at fresh and new multi-month lows following weekly supply data released midmorning Wednesday that was mostly bearish.

The latest selloff, pressing oil futures towards the next set of long-term support points, comes despite a rally in equities spurred by comments from Federal Reserve Chairman Jerome Powell suggesting the pace of future increases in the federal funds rate would slow. The U.S. dollar reversed off a two-week high following his remarks, and ahead of the release of Federal Open Market Committee minutes from their Nov. 7-8 meeting Thursday afternoon. Central bankers meet again Dec. 18-19. Nymex January WTI futures settled down $1.27 at $50.29 barrels (bbl), on course to break below $50 bbl for the first time since early October 2017, trading at a $50.06 intraday low.

ICE January Brent crude dropped $1.45 to a $58.76 bbl 13-month low settlement on the spot continuous chart ahead of the contract's expiration Friday afternoon, with February delivery settling at a $0.33 premium to the expiring contract.

Nymex December ULSD futures settled down 4.76 cents at a $1.8384 gallon 9-1/2 month low on the spot continuous chart and at a 0.32 cents premium to January delivery ahead of December contract expiration Friday afternoon. Wednesday's settlement was the second lowest on the spot continuous chart in 2018, with the previous low reached mid-February at $1.8369 gallon.

Nymex December RBOB futures declined the least on the session, falling 2.29 cents to settle at $1.3979 gallon ahead of expiration Friday afternoon, ending at a 1.95 cents premium to the January contract.

The bearish highlights from Wednesday morning's EIA report for the week-ended Nov. 23 was the 10th consecutive weekly increase in commercial crude inventory in the United States, up 3.6 million bbl to a 450.5 million bbl one-year high. Distillate fuel stocks registered its first weekly build in 10 weeks, up 2.6 million bbl, while implied demand plunged 701,000 bpd to an 11-week low at 3.569 million barrels per day (bpd), suggesting holiday downtime at industrial and commercial businesses.

EIA reported a 764,016 bbl drawdown in gasoline stocks for the week profiled while implied demand was up 3,000 bpd to 9.188 million bpd. That compares with gasoline production at 9.168 million bpd and exports averaging 1.061 million bpd—the fourth highest weekly export rate in 2018. Total U.S. crude and products exports reached a record high at 8.714 million bpd during the week-ended Nov. 23.

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

(CZ)

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