Oil Lower Ahead of API Data

Brian L Milne
By  Brian L. Milne , DTN Refined Fuels Editor

NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled lower Tuesday afternoon ahead of an oil supply report by the American Petroleum Institute that’s expected to show an eighth straight weekly domestic crude oil stock build that would add to an already saturated U.S. market.

A survey for the week-ended Nov. 13 showed expectations for a 1.8 million barrel crude oil stock build, with Cushing, Oklahoma stockpiles projected to have climbed by 500,000 bbl. Inventories have risen by 32 million bbl during the prior seven weeks.

The continued rebuilding of Cushing stocks put pressure on spot-month West Texas Intermediate Tuesday afternoon along with the expiration of options on the spot month contract. WTI rallied Monday on positive technical markers and following Friday’s terrorist attacks that raised fears of a threat to Middle East oil supplies. France stepped up retaliatory attacks on Islamic State terrorists in Syria, but analysts said Syria is marginal to the oil market and cited last week’s report from the International Energy Agency saying developed nations have 3 billion bbl of crude in storage acting as a cushion for any temporary shocks to the market.

At settlement, NYMEX December WTI futures were down $1.07 at $40.67 bbl while ICE January Brent futures dropped 99 cents to $43.57 bbl after an inside trading session.

NYMEX December ULSD futures eased 1.70 cents to $1.3981 gallon while the December RBOB futures contract ended little changed at $1.2380 gallon.

The U.S. dollar rallied to a fresh seven-month high versus a basket of six major currencies on expectation the Federal Reserve will raise interest rates next week. A stronger dollar puts pressure on dollar denominated crude oil prices.

Data released earlier today showed the consumer price index rose by a more than expected 0.2% in October after a 1.0% decline in September, with factory output rising for the first time in three months. Meanwhile, the German ZEW consumer confidence reportedly rose in November.

The market continues to keep a close watch over supply, however, and there remains uncertainty in the market given the state of geopolitics. Investors are also rebalancing portfolios ahead of expiration of the December WTI crude contract on Nov. 20.

The American Petroleum Institute is scheduled to release its report at 3:30 p.m. CT and data from the Energy Information Administration at 9:30 a.m. CT Wednesday.

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


Brian Milne