NEW YORK (DTN) -- New York Mercantile Exchange oil futures dropped to one-week lows Wednesday afternoon on the back of a bearish oil report from the Energy Information Administration, and concerns major oil producing countries may not follow-through on their pledge to reign in production in January.
EIA's Weekly Petroleum Status Report for the week-ended Dec. 2 showed crude oil inventories in the United States fell more than expected last week on higher demand while refined oil product stocks surged more than expected on weaker demand.
The data showed commercial crude stocks were drawn down 2.4 million barrels (bbl) to 485.8 million bbl, but left stocks 7.1% higher than a year ago and at the upper limit of the average range for this time of year.
Moreover, crude supply at the Cushing supply hub in Oklahoma jumped 3.8 million bbl to 65.3 million bbl from the week prior. Cushing is the delivery point for the NYMEX crude oil futures contract.
The finished oil products data also tended to the bearish side. The agency reported gasoline supplies surged 3.4 million bbl and distillate fuel supplies increased by 2.5 million bbl for the week, as demand for the two product categories fell by 323,000 barrels per day (bpd) and 137,000 bpd, respectively.
Overall, the EIA data showed total commercial petroleum stocks climbed 1.4 million bbl while total products supplied over the last four-week period fell 1.0% year-over-year to 19.6 million bpd.
NYMEX January WTI crude oil futures settled $1.16 lower at $49.77 bbl, near a one-week low of $49.72. February Brent crude futures on the IntercontinentalExchange settled 93 cents lower at $53.00 bbl.
In products trade, NYMEX January ULSD futures dipped 1.95 cents to $1.6184 gallon at settlement, while January RBOB futures tumbled 2.77 cents to $1.5081 gallon at the close of formal session trading.
In addition to the EIA data, doubts increased that the Organization of Petroleum Exporting Countries and Russia will cut output next month as indicated last week following reports Russian crude oil production flowed at 11.21 million bpd in November, the 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.
OPEC on Nov. 30 agreed to cut its output by 1.2 million bpd to 32.5 million bpd starting on Jan. 1, with non-OPEC producers also trimming a combined 600,000 bpd. However, EIA's Short-term Energy Outlook report on Tuesday projected the cartel's 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 email@example.com
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