Oil Falls Ahead of EIA Data
NEW YORK (DTN) -- New York Mercantile Exchange oil futures opened lower Wednesday morning ahead of weekly oil data from the Energy Information Administration that’s expected to show another build for U.S. crude oil stockpiles.
The oil futures complex fell across the board overnight after a strike by Kuwaiti oil workers ended and the American Petroleum Institute reported an increase in weekly crude oil stocks in the United States. A stronger dollar added downward pressure on oil futures.
At 9:00 AM ET, NYMEX May West Texas Intermediate crude futures were down 95cts at $40.13 bbl, ahead of its expiration on this afternoon. The June contract fell 85cts to $41.62. June Brent on the IntercontinentalExchange moved 78cts lower to $43.25 bbl.
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In products trade, NYMEX May ULSD futures eased 1.23cts to $1.2509 gallon while NYMEX May RBOB futures retreated 2.09cts to $1.4590 gallon.
On Wall Street, equities moved higher on risk-off trade, with the dollar reversing higher.
The end of the Kuwait strike after only three days brought back the bearish market sentiment following the after the failure in Doha Sunday of talks to freeze output at January level by leading oil producers including Russia and Saudi Arabia.
The strike had cut Kuwaiti oil production to slightly above 1 million bpd from about 2.8 million bpd in March, but workers resumed their duties after the country's oil minister refused to negotiate while the walkout was ongoing.
Russian oil minister Alexander Novak said the failure to agree on freezing output means Russia and the Organization of Petroleum Exporting Countries might raise their output, which would delay the recovery of oil prices until mid-2017. OPEC holds its biannual meeting in Vienna in June.
However, analysts said if the oversupply keeps oil prices low, then high-cost producers may be forced reduce production, which could work to rebalance the market in the long run. The analysts cited U.S. oil production that has fallen to below 9 million bpd as of the week-ended April 8, the lowest since October 2014.
Domestically, API reported U.S. crude oil inventories rose by 3.1 million bbl during the week-ended April 15 versus an expected 1.7 million bbl increase. API also reported a drawdown of 1 million bbl for gasoline versus an expected 1.3 million bbl decline for the fuel. Distillate supplies fell 2.5 million bbl versus an expected increase of 200,000 bbl.
George Orwel can be reached at george.orwel@dtn.com
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