Oil Futures End Higher After EIA Weekly

NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled higher Wednesday afternoon following the release of weekly oil supply data released midmorning by the U.S. Energy Information Administration.

The late-session rally on the NYMEX came on the heels of a flat paper trading session that had futures prices moving in and out of positive territory until the market bulls moved prices higher into the settlement range.

The minutes released from the last meeting of the Federal Reserve indicated officials are of the opinion that economic conditions needed to trigger the first interest rate hike in nearly a decade could well be met by their next meeting in December.

The majority of Fed officials believe the job market will improve further and that inflation will begin to move toward a 2% annual target, and they took notice of the U.S. economy's resilience in the face of a global slowdown. There are few economists however who believe the U.S. economy can carry the global economy on its back indefinitely.

Earlier, EIA had issued a report showing a smaller than expected increase in U.S. crude oil supply, while distillates supplies unexpectedly declined during the week-ended Nov. 13 amid a jump in weekly demand. The 1.5 million bbl surge in domestic gasoline stocks reported by the EIA was also a data shock.

At settlement, NYMEX December WTI futures were up 8cts at $40.75 bbl while ICE January Brent futures gained 57cts to $44.14 bbl after inside trade.

NYMEX December ULSD futures climbed 1.23cts to a $1.3804 gallon settlement while the December RBOB futures contract rallied 2.81cts to $1.2661 gallon at settlement, off a three-day high of $1.2809.

The RBOB futures contract was the strongest of any contract in the complex, boosted by expectations demand will increase heading into the holiday season, said analyst Phil Flynn at Price Futures.

On Wall Street, U.S. stock indices had a broad rally as the U.S. dollar backed off a seven-month high despite the Fed minutes, with a weakening dollar favorable for equities and oil futures.

The oil market's focus today was trained on fundamentals. EIA's report covering the week-ended Nov. 13 showed crude oil inventories increased by 252,000 bbl, falling short of an expected 1.8 million bbl build but bearish compared to the API's data showing a draw of 482,000 bbl.

At the Cushing hub in Oklahoma, EIA reported crude stockpiles increased 1.5 million bbl, three times more than the expected 500,000 bbl build but near the 1.3 million bbl build reported by API.

For products, EIA reports a build of 1.0 million bbl for gasoline stocks, surpassing the API's 236,000 bbl build but confounding expectations for a 500,000 bbl draw. EIA said distillate stocks were unexpectedly draw down by 790,992 bbl, falling short of API's 1.5 million bbl draw, but missing a projected 300,000 bbl build.

The distillate stock draw was linked to a 344,000 bpd surge in demand. Demand for gasoline was down 334,000 bpd while refiner crude input, a proxy for crude demand, was up 137,000 bpd for the week profiled.

Despite the data, the oil market remains oversupplied and the geopolitical situation hasn't changed much. The United States, France, Russia have pledged to coordinate their retaliatory attacks against Islamic State terrorists in Syria.

Members of the Organization of Petroleum Exporting Countries met on Tuesday to find a common ground ahead of their regularly scheduled biannual meeting in Vienna on Dec. 4, but failed to produce a consensus position on oil production quotas.

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