Oil Futures Mixed on EIA Data, OPEC

NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled mixed Wednesday afternoon after data showing another rise in the number of active oil drilling rigs and uncertainty over whether the Organization of Petroleum Exporting Countries overshadowed a bigger-than-expected draw for U.S. crude oil inventories.

The oil futures complex seesawed within a narrow range throughout the session, with traders squaring their positions amid low volume ahead of the U.S. Thanksgiving holiday. U.S. financial markets are closed Thursday and Friday.

"The market just flip-flopped today, fighting against a strong dollar versus the odds of an OPEC deal [to cut output]," said analyst Phil Flynn at Price Futures. "The EIA data showing crude stock draws and refinery runs up were also supportive, but it's been very difficult for oil to hold onto again gains or to continue the rally because of a strong dollar. There's some uncertainty holding [oil prices] back."

Other analysts agreed.

"The market is trading moderately lower as part of some broader risk-off selling tied to renewed strength in the dollar," said Tim Evans at Citi Futures. "Oil traders are continuing to assess the prospects for an OPEC production cap at the upcoming November summit in Vienna."

Evans said Iran and Iraq were resisting the proposal to put a cap on OPEC output, but he continues to think "a deal of some kind is likely, although compromises necessary to reach an agreement may well weaken the result."

The dollar index rallied to a 14-year high after minutes of the Federal Reserve's meeting earlier this month confirmed the central bank was confident on the eve of the Nov. 8 U.S. presidential election that the nation's economy was strong enough to warrant a hike in interest rates.

Other data issued today bolstered that positive view about the economy, with a 0.4% rebound in U.S. durable goods orders in October, low U.S. jobless claims and rising consumer sentiment that bodes well for energy demand.

Meantime, the Energy Information Administration's report for the week-ended Nov. 18 showed a 1.3 million barrel (bbl) crude stock draw, a 2.7 million bbl gasoline stock build and a 326,000 bbl rise for distillate fuel supplies. Demand data was up 177,000 barrels per day (bpd) for distillates but down 335,000 bpd for gasoline. Crude oil refinery inputs rose 271,000 bpd for the week, as refinery runs jumped 1.6% to 90.8%.

Internationally, frustration is growing with the way negotiations to cut OPEC production are dragging on with little progress ahead of the group's Nov. 30 summit in Vienna. OPEC member countries are struggling to reach a final agreement on how to share production cuts implied by the preliminary output deal agreed in September.

NYMEX January West Texas Intermediate crude futures settled 7 cents lower at $47.96 per bbl, but up $2.27 versus its week prior Friday close. The January Brent crude oil futures contract on the ICE futures complex settled 17 cents down at $48.95 bbl and ramped up $2.09 this week.

The NYMEX December ULSD futures contract edged 0.94 cent lower to $1.5169 gallon to finish the short holiday week up 5.92 cents. The December RBOB futures contract rallied 1.19 cents to $1.4217 gallon at settlement to post an 8.26-cent week-over-week advance.

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