Oil Settles Mixed Wednesday

NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled shallowly mixed Wednesday afternoon with crude a tad higher, ULSD flat and RBOB futures lower following a roller-coaster trading session following the shock election of New York businessman Donald J. Trump as the 45th president of the United States.

Crude futures tracked the down-and-up swings in the equities market, with weekly supply and demand data also eyed, while RBOB retreated in part due to excess supply following the weekend restart of Colonial Pipeline's Line 1 after being down for a week due to an explosion and fire in Alabama, said analysts.

At settlement, NYMEX December West Texas Intermediate crude oil futures were up 29cts at $45.27 bbl. ICE January Brent futures were 32cts higher at $46.36 bbl. NYMEX December ULSD futures were flat at $1.4411 gallon while the December RBOB futures contract eased 1.20cts to $1.3572 gallon.

"WTI has now calmed down after swinging with the financial markets," said Tom Bentz, vice president for energy derivatives at ABN AMRO in New York. "The [EIA] crude inventory build was less than API's. I think there's a potential with the Trump presidency that we'll see policy changes. As you can see, the refining stocks are up on the potential for a relief from EPA regulations, but the spreads are negative today because crude prices rose while gasoline fell."

He also said the Organization of Petroleum Exporting Countries is now less likely to agree to cut production following the election of Trump.

"The theory is that we've have less regulations on the oil industry and so U.S. production will increase," he said. "That means it won't make a difference even if they agree to cut production. OPEC doesn't want to shoulder the responsibility of stabilizing the market by itself."

OPEC is currently divided over how to implement the production cut pledged in September, although the cartel hopes to make some progress by the Nov. 30 biannual summit in Vienna.

On domestic supply, the Energy Information Administration's report covering the week-ended Nov. 4 detailed a more than expected 2.4 million bbl crude oil stock build, with gasoline supplies down a more than expected 2.8 million bbl and distillate fuel supplies tumbling a steeper than forecast 1.9 million bbl.

Refinery crude intake, a proxy for crude demand, rose 369,000 bpd on runs up 1.9% to 87.1%. Gasoline demand also edged up 30,000 bpd while distillates demand soared 180,000 bpd for the week reviewed.

"The 1.9% increase in the refinery operating rate was perhaps an offset to both the build in crude and the draws in the product inventories," said analyst Tim Evans at Citi Futures.

On Wall Street, the Dow Jones Industrial Average futures recovered plunging by as much as 800 points overnight, soaring more than 300 points this afternoon. The dollar index fell to a one-month low before rebounding.

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