Oil Ends Mixed Ahead of Supply Data

NEW YORK (DTN) -- New York Mercantile Exchange oil futures ended mixed Tuesday afternoon after a choppy session, as traders moved to unwind positions in the expiring November West Texas Intermediate crude oil contract while awaiting the release of weekly domestic petroleum inventory data.

“The oil market has been alternating between higher and lower and we are now waiting for more data before making a move,” said analyst Phil Flynn at Price Futures. “Oil tried to follow the stock market but didn’t keep up and now we are waiting for inventory data.”

The December RBOB futures contract was the strongest segment of the complex today, boosted by increased buying interest as bargain hunters took advance of low prices after the steep sell-off on Monday.

The RBOB contract plunged about 5% Monday primarily on speculation of an earlier-than-expected restart for a products pipeline in the Midwest, Flynn said.

The November NYMEX WTI contract expired at the regular session close 34 cents lower at $45.55 barrel, off a three-day low of $45.23. December WTI futures settled little changed on the day at $46.29 bbl.

The December Brent crude futures contract settled up 10 cents at $48.71 bbl on the IntercontinentalExchange, rebounding after posting a $48.22 three-day low.

In products trade, NYMEX November RBOB futures reversed higher, up 2.69 cents at a $1.2783 gallon settlement after inside trade. November RBOB futures settled little changed, down 0.04 cents to $1.4487 gallon, having posted a seven-week spot low of $1.4311 earlier.

The oil market has recently come under selling pressure from oversupply and weak Chinese economic data, but a weaker dollar provided limited support to the oil complex today while weaker equities indicated bearish investor sentiment.

Most of the focus was trained on short term fundamentals. A survey shows the market expects an average U.S. crude stock build of 3.3 million bbl for the week ended Oct 16, with gasoline stocks expected to have declined 1.7 million bbl and distillate fuel stocks drawn down 2.0 million bbl.

The American Petroleum Institute is set to release its weekly data at 3:30 p.m. CDT while the Energy Information Administration’s data are due out midmorning on Wednesday.

The market is also bracing for more oil supply from Iran. Tehran has said it might be able to produce 3.4 million barrel per day within six to seven months of sanctions being lifted, up from 2.8 million bpd in recent months.

The July 14 nuclear deal between Iran and six world powers was adopted on Sunday under which Tehran agreed to make cuts in its nuclear programs in exchange for sanctions relief.

The Organization of Petroleum Exporting Countries is pumping significantly more than its 30 million bbl oil production ceiling.

On the economic front, China on Monday released third quarter growth data showing it grew at the slowest growth rate since first quarter 2009 despite a raft of stimulus measure implemented this year. The data was worrisome for those who expected China’s oil consumption to remain strong.

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