Oil Ends Mixed Thursday

NEW YORK (DTN) -- New York Mercantile Exchange oil futures ended mixed Thursday afternoon, with the crude and ULSD contracts reversing lower alongside equities after data showed a drop in U.S. manufacturing while Hurricane Joaquin is moving deep into the Atlantic Ocean and away from the U.S. East Coast, where refinery operations and product pipelines could be threatened with outages.

“The hurricane has been strengthening, but the most recent track seems to take if further out in the Atlantic,” said David Thompson, vice president at Powerhouse brokerage in Washington, D.C. “Additionally, Brent sold off during the day, due perhaps to the fact that the U.S. and Russian militaries were reportedly talking with one another in order to avoid any sort of incidents over Syria air operations.”

Others agreed.

“Oil was up early when people got excited about Chinese data and the storm, then it sold off because the storm won’t have any impact on oil facilities,” said analyst Phil Flynn at Price Futures in Chicago.

NYMEX November WTI crude futures settled 35 cents at $44.74 barrel, reversing off a one-week high of $47.10. ICE November Brent crude futures settled 68 cents lower at $47.69 bbl, reversing off a one-week high of $49.84.

In products trade, NYMEX November ULSD futures settled down 1.76 cents at $1.5198 gallon, reversing off a one-week high of $1.5817. NYMEX November RBOB futures were near flat, settling up 0.01 cents at $1.3668 gallon, off a one-week high of $1.4233. October products contracts expired Wednesday afternoon.

The oil complex had rallied on concerns over the hurricane and encouraging data from China early Thursday. Hurricane Joaquin, currently bearing down on the Bahamas, has been upgraded to a category 4 storm. It was initially projected to make landfall between North Carolina and New York by Sunday but the latest computer models are showing that path changing northeastward.

New Jersey Gov. Chris Christie declared a state of emergency while New York was still monitoring the storm, as weather forecasters warily eyed the projected path of the hurricane. New Jersey and New York residents are particularly leery after flooding from Hurricane Sandy a few years ago caused power outages and fuel shortages in the region for weeks.

Traders also parsed weak U.S. economic data and their implication on interest rates.

The Institute for Supply Management’s manufacturing index dropped to 50.2 in September -- the lowest level since mid-2013 -- down from 51.1 in August. U.S. manufacturing has taken a hit from a strong dollar, weakening global economy and a slump in exports and reduced profit margins.

Earlier in the day, data from China showed manufacturing index edged up in September, but remains under 50 for the second straight month, indicating a contraction. The Chinese data was taken as good news because it suggested the world second biggest economy was stabilizing after slowing for much of this year.

Also, the Labor Department said U.S. jobless claims rose by a more-than-expected 10,000 to 277,000 in the week-ended Sept. 26, raising fears Friday’s payroll report could disappoint. So far, the markets expects the payroll report to show 200,000 jobs added last month, which would be positive because it shows continued resilience of the labor market.

Oil data issued Wednesday by the Energy Information Administration showed domestic crude oil and gasoline stocks increased by 4.0 million bbl and 3.3 million bbl, respectively, during the week-ended Sept. 25. Domestic crude production declined 40,000 bpd to 9.096 million bbl last week EIA showed, the lowest output rate since late November 2014.

George Orwel can be reached at george.orwel@telventdtn.com