NEW YORK (DTN) -- New York Mercantile Exchange oil futures added to Tuesday’s losses at the start of regular trade Wednesday morning ahead of the 10:30 AM ET release of weekly oil inventory report by the Energy Information Administration.
The EIA report will cover the wee-ended Dec. 2 and the market expects it to show a stock draw in domestic crude oil and builds in refined oil product stocks.
The American Petroleum Institute late Tuesday reported a 2.2 million bpd crude stock draw, an 800,000 bpd gasoline stock build and a 4.0 million bbl spike for distillate fuel stocks. The trade organization also detailed a 4 million bbl build in crude oil inventories at the NYMEX WTI crude oil delivery point in Cushing, Oklahoma.
At last glance, NYMEX January WTI crude futures were down 60cts at $50.33 bbl. February Brent crude futures on the ICE complex were 53cts lower at $53.40 bbl. NYMEX January ULSD futures were posting a 1.32cts loss at $1.6247 gallon, and the January RBOB contract was down a moderate 0.55cts at $1.5304 gallon.
Oil speculators are booking profits on signs leading oil producing countries may be pumping more oil than they promised last week. The Organization of the Petroleum Exporting Countries agreed on Nov. 30 to cut its output by 1.2 million bpd to 32.5 million bpd starting in 2017, with Russia and other non-OPEC producers also reducing a combined 600,000 bpd.
However, the latest reports indicate Russia pumped 11.21 million bpd in November, its highest output rate in nearly 30 years, while Saudi Arabia and Kuwait plan to resume oil production from joint fields in a mutual neutral zone.
If Iran, Libya and Nigeria, exempted from last week’s supply deal increase output the planned cuts would be offset and the ongoing global supply overhand would last longer than previously thought, warned analysts.
EIA projects OPEC output would increase by 670,000 bpd year-over-year to 33.2 million bpd in 2017, up from 32.53 million bpd and 700,000 bpd above the limit OPEC set for itself in Vienna a week ago.
George Orwel can be reached at firstname.lastname@example.org
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