Oil Mixed as Storm Threat Eases

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures were shallowly mixed at the start of regular trade Friday morning as traders assess the impact of Hurricane Matthew while also considering the global and domestic supply-demand disposition.

Traders briefly booked profits overnight on news Florida's east coast was spared significant damage after the storm made landfall overnight at a reduced intensity.

Matthew was downgraded to a Category 3 storm with wind gusts of 120mph, said the National Hurricane Center. The storm is projected to move north along the coastline to the Carolinas.

No significant damage was reported in Florida, although most hurricane-related destruction often follows from rain, tidal surges and flooding.

Local officials in Florida expressed relief in dodging a potential disaster, although they urged people to stay indoors as they await a storm surge. About 600,000 homes in Florida are without power, said Gov. Rick Scott, adding power service would be restored quickly.

The market now awaits Baker Hughes Inc.'s oil rig count report for the week-ended today due out at midday.

At last look, NYMEX November WTI crude futures edged up 5cts to $50.49 bbl, off a four-month spot high of $50.74. ICE November Brent futures were a penny down at $52.50 bbl, off a fresh four-month spot high of $52.84.

In products trade, NYMEX November ULSD futures contract slid 0.51cts to $1.5907 gallon, off a $1.6058 fresh one-year spot high. NYMEX November RBOB futures retreated 0.17cts to $1.4961 gallon.

On Thursday, oil futures rallied on concern disruptions caused by the hurricane could tighten products supply, and on reports the Organization of Petroleum Exporting Countries will meet again in Turkey this weekend with non-OPEC nations such as Russia and Mexico to consider further production cuts above those agreed to last week in Algiers.

However, analysts are not convinced that OPEC's pledge to cut output for the first time since 2008 will result in higher prices, as doubts run high over the feasibility of the group's decision, a survey by Reuters showed on Friday.

Oil futures also continue to be weighed down by excess supply in the physical market, and a stronger dollar, analysts said.

Energy Information Administration reported midweek that showed crude oil stocks fell 3.0 million bbl to 499.7 million bbl in the week-ended Sept. 30, the fifth straight weekly decline and below 500 million bbl for the first time since January.

EIA said starting with this week's data that will be reported on Oct. 13, it will no longer include crude stored in tanks on lease lands in the total commercial crude oil inventory data series. The change will reduce total crude stocks by roughly 31 million bbl.

The U.S. dollar index rallied to a two-month high after data issued Thursday showed jobless claims fell to the lowest level since 1973, which raises the odds of an increase in federal funds rate by the Federal Reserve prior to year-end.

The payroll report for September issued today showed steady job market improvement, with 156,000 jobs added last month while the unemployment rate edged up to 5%.

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