Oil Ends Mixed Tuesday

NEW YORK (DTN) -- New York Mercantile Exchange oil futures ended mixed with an upside bias Tuesday afternoon after seesawing earlier in the session, buoyed in late trade by an optimistic outlook on demand and oil prices while domestic production is projected to decline next year. A stronger dollar limited the upside for the complex.

The market now awaits U.S. oil inventory data for the week-ended Nov. 6 from the American Petroleum Institute due at 3:30 p.m. CT. The Energy Information Administration will release its corresponding weekly data on Thursday delayed by the Veterans Day Holiday on Wednesday.

NYMEX December West Texas Intermediate futures settled 34 cents higher at $44.21 barrel, bouncing off a better than one-week low at $43.57. ICE December Brent futures settled 25 cents higher at $47.44 bbl.

The NYMEX December ULSD futures contract edged up 0.91 cents to $1.4865 gallon while the December RBOB futures contract fell by 0.87 cents to $1.3618 gallon at settlement.

On Wall Street, U.S. stock indices were mixed, with Dow Jones Industrial and S&P 500 reversing slightly higher after shaking off early losses. The market was pressured by weak inflation data from China and a stronger dollar, with the greenback rallying to a seven-month high.

The odds of a U.S. Federal Reserve interest rate hike increased following last week's positive payroll report, which showed a robust labor market. Raising rates next month for the first time in nearly a decade would reduce the flow of cheap cash to market investors and liquidity the market and potentially add downward pressure to oil prices.

Meantime, the International Energy Agency issued its World Energy Outlook, predicting that oil prices will rebound to about $80 bbl by 2020 and sees global oil demand growth of 900,000 barrels per day by 2020. There will be long-term impact to supply in the current low oil price environment, IEA added.

Also, the U.S. Energy Information Administration's November Short-term Energy Outlook report raised global oil demand growth rates for 2015 and 2016 from levels published last month. EIA also projected a decline in supply from non-members of the Organization of Petroleum Exporting Countries for the first time since 2008.

The new STEO report raises the demand outlook for 2015 by 75,000 bpd and for

2016 by 59,000 bpd, driven by rising consumption in developed nations, while oil production is expected to decline in the United States and Canada, said the report.

U.S. crude oil production for 2016 was lowered by 100,000 bpd to 8.8 million bpd, reflecting lower crude oil prices and rig counts in 2016 than projected in the October STEO. Domestic consumption is expected to grow by an average of 300,000 bpd in 2015 and by 100,000 bpd in 2016.

Meantime, a survey of analysts showed the market expects U.S. oil supply data for the week-ended Nov. 6 to produce a stock build of 800,000 bbl in crude, a 300,000 bbl gasoline stock decline and a 1.3 million bbl plunge in total distillates held in storage.

A report by Genscape shows crude stocks at Cushing, Oklahoma delivery hub for WTI rose last week by 1.8 million bbl.

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