Oil Prices Settle Mixed

NEW YORK (DTN) -- New York Mercantile Exchange oil futures ended mixed with a downside bias, with RBOB the strong contract on the complex in anticipation of strong demand during the coming holidays.

"Today the market had no passion and the only issue is whether December WTI contract will close below $40 for the first time in about two months ahead of the expiration," said analyst Phil Flynn at Price Futures.

He added, "There're no drivers today. Gasoline is the only strong contract because people are anticipating strong demand. RBOB is supporting the energy complex, and I think it's going to be slow until we get the [Baker Hughes] rig-count tomorrow."

Others agreed.

"The petroleum markets are mixed in Thursday trade, with apparent late long liquidation in December WTI ahead of Friday's contract expiration weighing down that corner of the complex, but RBOB gasoline prices surprisingly resilient given the unexpected 1.0 million barrel build in U.S. total gasoline inventories for the week ended November 13 reported yesterday," said Tim Evans at Citi Futures.

A weaker U.S. dollar also provided support for a range of commodities, but seemed to have had a greater support for the ICE Brent prices than for NYMEX WTI.

The U.S. dollar fell to a three-day low after Federal Reserve officials said the pace of the expected interest rate hike would be slow enough to have any impact on investors' need for liquidity to trade. Investors also welcomed the Fed's economic outlook that it deems strong enough to handle a rate hike and sufficiently resilient to sustain the global slowdown.

U.S. jobless claims fell 5,000 to 271,000 in the week ended Nov. 14 from the unrevised 276,000 level in the Nov. 7 week, the Labor Department said Thursday morning.

The NYMEX December WTI futures contract dropped 21 cents lower to a $40.54 bbl settlement, ahead of its expiration on Friday, with the January contract down 23 cents at $41.72 bbl. The ICE January Brent futures advanced 57 cents to a $44.14 bbl settlement.

In products trade, NYMEX December ULSD futures climbed 1.23 cents to $1.3804 gallon while the December RBOB futures contract rallied 2.81 cents to a $1.2661 gallon, off a one-week spot high at $1.3041.

The Energy Information Administration on Wednesday reported a smaller than expected rise in domestic crude oil supply, while distillates supplies unexpectedly declined during the week-ended Nov. 13 amid a jump in weekly demand.

The EIA report showed crude stocks rose by 252,000 bbl, falling short of an expected 1.8 million bbl build, as implied demand rose 137,000 barrels per day. At the Cushing hub in Oklahoma however, crude stockpiles increased 1.5 million bbl, three times more than an expected 500,000 bbl build. U.S. crude production was unchanged at 9.18 million bpd.

The EIA report also showed a surprised build of 1.0 million bbl in gasoline stocks, and an unexpected distillates draw of 790,992 bbl. The distillate stock draw was linked to a 344,000 bpd surge in demand. Demand for gasoline was down 334,000 bpd.

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