Oil Mostly Lower on Bearish Sentiment

NEW YORK (DTN) -- New York Mercantile Exchange oil futures were mixed with a downward bias Tuesday morning after coming under pressure from a strong dollar, soft economic data from China and excess oil supply.

Bearish sentiment was also driven by a report by the International Energy Agency recognizing the long-term impact to supply of the current low oil price environment.

At 8 a.m. CT, NYMEX December West Texas Intermediate futures eased 4 cents to $43.83 barrel while ICE December Brent futures nudged 7 cents lower at $47.12 bbl.

The NYMEX December ULSD futures contract eased 0.02 cents to $1.4772 gallon, while the December RBOB futures contract fell by 0.38 cents to $1.3667 gallon.

On Wall Street, U.S. stock indices tracked a sell-off in global equities as the dollar rose to a fresh seven-month high as the risk of a U.S. Federal Reserve interest rate hike grew following last week's positive payroll report that showed a robust labor market. Raising rates next months for the first time it a decade would reduce liquidity the market has come to rely on in recent years, which is bearish for oil prices.

In China, meanwhile, inflation slowed for a second month in a row and stayed well below the government's full year target of 3%. Consumer prices rose 1.3% year-on-year in October, slower than the 1.6% increase seen in September and below forecasts at 1.5%.

China's economic woes have rattled the market this year because China is the world's second biggest oil consumer after the United States and a slowdown there could reduce global demand. The country's soft inflation data dulled investor sentiment Tuesday morning.

The market now awaits weekly domestic oil supply data from the American Petroleum Institute due this afternoon while the U.S. Energy Information Administration will release its weekly data a day late on Thursday, following the Veterans Day Holiday on Wednesday.

An early survey shows 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 oil, a 300,000 bbl gasoline stock decline and a 1.3 million bbl plunge in total distillates held in storage.

The EIA will release its November oil market report at noon Tuesday, which will provide a fresh monthly view on global supply and demand.

Long term, an extended period of low oil prices would benefit consumers, the International Energy Agency said today in its World Energy Outlook Report for 2015, but could also trigger energy security concerns by heightening reliance on a small number of low-cost oil producers, risking a sharp price rebound if investment falls short.

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