Oil Lower in Early Trade
NEW YORK (DTN) -- New York Mercantile Exchange oil futures were again lower at the start of regular trade Wednesday morning on a strengthening dollar, building domestic crude oil supplies and doubt that the Organization of Petroleum Exporting Countries will freeze output when they meet next month.
The American Petroleum Institute late Tuesday reported crude oil and distillate supplies unexpectedly rose during the week-ended Aug. 26, adding to the oversupply. API said crude stockpiles rose by 900,000 bbl versus an expected draw of 300,000 bbl.
On products, distillate fuel supplies increased 3.0 million bbl last week while a survey expected supplies to hold steady. Gasoline stocks were drawn down by 1.6 million bbl, surpassing an expected draw of 500,000 bbl.
The Energy Information Administration will release its oil data for the week-ended Aug. 26 at 10:30 AM ET.
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OPEC plans to discuss measures to take to stabilize the oil market during informal talks on the sidelines of an International Energy Forum being held Sept. 26-28 in Algeria. However, hopes for a deal to freeze production has dimmed because Saudi Arabia, Iran and Iraq continue to ramp up their output. Saudi Arabian Energy Minister Khalid al-Falih said overnight that the Kingdom doesn't have a specific production target, as its output is based on customer demand.
At 9:00 AM ET, NYMEX October West Texas Intermediate crude futures were down 40cts at $45.95 bbl, edging off a fresh two-week spot low of $45.75. October Brent crude on the IntercontinentalExchange declined 59cts $47.78 bbl, trading near a fresh two-week low of $47.64, with the November Brent contract down 52cts at $48.21.
NYMEX September ULSD futures were down 2.29cts to $1.4482 gallon, near a two-week low of $1.4476, while the October ULSD contract fell 2.01cts to $1.4646. NYMEX September RBOB futures fell 2.39cts to $1.4244 gallon, trading near a two-week low of $1.4225, with the October contract down 1.84cts at $1.3561.
The ICE October Brent crude and NYMEX September ULSD and RBOB futures contracts expire at the close of regular trade this afternoon.
The dollar climbed to a fresh three-week high this morning, with the U.S. currency continuing to strengthen on recent comments from Federal Reserve Chair Janet Yellen and Vice Chair Stanley Fischer that heightened the possibility for a hike in the federal funds rate as soon as September.
The increasingly hawkish tone by Fed officials is underpinned by positive data, and comes in front of Friday's nonfarm employment report from the Labor Department. Fed officials have highlighted a strong labor market in their comments regarding a rate hike.
The market expects 180,000 new jobs were added to the U.S. economy in August. This morning, ADP payroll services issued their monthly report indicating the private sector added 177,000 jobs in August versus estimates for 175,000.
Also underpinning the dollar's strength was consumer confidence, with data released Tuesday showing consumer confidence rose to an 11-month high in August.
George Orwel can be reached at george.orwell@dtn.com
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