Oil Choppy in Early Trade

NEW YORK (DTN) -- New York Mercantile Exchange oil futures traded on either side of Monday’s settlement during a choppy session Tuesday morning, as weaker economic data in China and Europe weighed against a decline in the dollar.

Traders also mulled a raft of mixed oil data, with the International Energy Agency saying this morning that the global glut in oil supply won’t go away anytime soon, while at the same time lifting its global oil demand estimate for this year while cutting its demand forecast for 2016.

Short-term the domestic oil supply disposition is also mixed, with the market expecting an average 750,000 barrel build for U.S. crude oil stocks, a 500,000 bbl stock build for distillate fuels and a 2.0 million bbl gasoline stock draw for the week ended Oct. 9, according to a new Schneider Electric survey.

The American Petroleum Institute will release its weekly data on Wednesday while the Energy Information Administration's weekly data is due Thursday, with both reports delayed a day because federal offices were closed Monday for the Columbus Day holiday.

At 8 a.m. CDT, NYMEX November West Texas Intermediate futures eased 20 cents to $46.90 bbl, off a five-day low of $46.60. ICE November Brent crude futures fell 20 cents to $49.66 bbl, off a five-day low of $49.40.

In products trade, NYMEX November ULSD futures eased 1.47 cents to $1.4877 gallon, off a two-week low of $1.4794. NYMEX November RBOB futures slid 0.90 cents to $1.3321 gallon, off a 1-1/2 week low at $1.3153.

On Wall Street, U.S. stock indices were down, tracking lower overseas bourses while the dollar index fell to a fresh three-week low. The dollar’s weakness is linked to expectation an increase in the U.S. federal funds rates would be delayed until next year.

The market’s focus is on both oil market fundamentals and the global economy. In its latest monthly Oil Market Report, IEA said it foresees the global oil market oversupplied through 2016 due to slowing demand and new supply from Iran.

Iran’s supply is still limited this year by Western sanctions, but some of those sanctions will likely be lifted following a nuclear deal with major powers this past summer.

IEA said growth in the world's consumption of oil is expected to slow from a 1.8 million barrels per day five-year high this year to 1.2 million bpd in 2016, which reflects a downward revision of the growth rate for next year by 200,000 bpd from September's outlook. Total consumption for 2016 is now projected at 95.7 million bpd.

IEA projects global oil demand in 2015 at 94.5 million bpd, up 100,000 bpd from its September outlook, when the agency hiked the forecast by 200,000 bpd.

It comes as new data showed China's imports fell for the 11th time in a row in September while German investor confidence also dropped to a one-year low. China said its September imports fell by a wide margin of 20.4% from a year ago while exports contracted, although by less than predicted. China's economic slowdown has worldwide impact.

Also, inflation turned negative in the United Kingdom in September, the second time that has occurred since 1960, analysts said.

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