NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled lower Tuesday afternoon amid news Congress and the White Hose have agreed to sell oil from the Strategic Petroleum reserve, adding to an already oversupplied market.
It comes ahead of a weekly report that's likely to show continued buildup in crude oil supply while Americans aren't feeling confident about the economy.
"The budget talks set a negative tone for the market… we're talking about adding more oil to the already big glut in supply," said analyst Phil Flynn at Price Futures. "It's the same thing we saw about Iran nuclear deal that's supposed to add more supply to the market."
NYMEX December West Texas Intermediate futures settled 78 cents lower at $43.20 barrel, off a two-month spot low of $42.58. ICE December Brent futures settled down 73 cents at $46.81 bbl, off a 1-1/2-month spot low at $46.41.
NYMEX November ULSD futures slipped 0.15 cents to $1.4244 gallon at settlement, near a two-month low of $1.4079. The NYMEX November RBOB futures contract settled down 0.07 cents to $1.2872 gallon, off a four-day low of $1.2711.
Wall Street was also lower Tuesday with the three main stock indices falling after the Conference Board of New York said consumer confidence fell to a four-month low in October. The confidence index fell to 97.60 from a revised 102.6 reading in September, while falling short of an expected 102.9.
Consumer confidence is a key data point because consumer spending makes up three-quarters of the nation's economy. This new data comes as the Federal Open Market Committee started its two-day meeting today to discuss the nation's economic health.
The Fed will release its decision Wednesday on interest rates and lay out its outlook for the economy, although analysts said they don't expect a hike in the rates. Recent economic data have been weak and the market looks forward to the first reading of third quarter gross domestic product due on Thursday. A slowdown in the economy would reduce demand, analysts said.
On supply, the American Petroleum Institute is set to release its weekly oil report for the week-ended Oct. 23 at 3:30 p.m. CDT, and it's expected show an average build of 2.0 million bbl for crude stocks. That would be the fifth straight weekly crude stock increase, following four prior builds totaling 22.7 million bbl.
Also weighing on the market is news the U.S. government will sell 8% of its 695 million bbl of crude oil from Strategic Petroleum Reserve over the next few years. The expected sale of the federal oil supply is part of a two-year budget deal tentatively agreed overnight by the White House and Congress.
George Orwel can be reached at firstname.lastname@example.org
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