Oil Shallowly Mixed in Wednesday Trade

NEW YORK (DTN) -- March oil futures on the New York Mercantile Exchange were little changed at the start of regular trade Wednesday morning, trimming an overnight decline after three straight sessions with lower settlements spurred by growing concern over building oil supply in the United States.

The American Petroleum Institute late Tuesday reported a staggering stock build of 14.2 million bbl for crude during the week-ended Feb. 3, with gasoline supplies also rising by 2.9 million bbl and distillate fuel inventories increasing 1.4 million bbl. The builds were far greater than expected, as a survey had indicated estimated stock builds of 2.7 million bbl for crude, 1.2 million bbl for gasoline and 1.3 million bbl for distillate fuels.

The market now awaits the Energy Information Administration's Weekly Petroleum Status Report for the week-ended Feb. 3 to see whether or not the data confirms the API's numbers, with the WPSR due at 10:30 AM ET.

"[The API report was] a clearly bearish surprise if confirmed by the more definitive Weekly Petroleum Status Report," said analyst Tim Evans at Citi Futures.

At 9:00 AM ET, NYMEX March West Texas Intermediate futures were down 49cts at $51.58 bbl, near a $51.22 new two-week low, and ICE April Brent crude oil futures had slipped 32cts to $54.73 bbl, edging off a $54.44 fresh two-week spot low. NYMEX March ULSD futures eased 0.47cts to $1.6174 gallon, having declined to a $1.6028 new one-week spot low, and March RBOB futures nudged down 0.72cts to $1.4803 gallon, paring a decline to a better than two-month spot low of $1.4650.

The API report follows the monthly Short-term Energy Outlook issued Tuesday by the EIA projecting an increase in U.S. crude production, and a Baker Hughes, Inc. news release also issued Tuesday that said the U.S. rig count in January gained 49 versus December to average 683.

In its Short-term Energy Outlook, EIA projects U.S. crude oil production would average 9.0 million bpd in 2017 and 9.5 million bpd in 2018, up from an estimated 8.9 million bpd in 2016.

The increase in U.S. production, which averaged 8.942 million bpd during the four weeks ended Jan. 27, a 10-month high, according to EIA data, is neutralizing 1.758 million bpd in agreed to production cuts by the Organization of the Petroleum Exporting Countries and 11 non-OPEC oil producers, said analysts. OPEC and its non-OPEC partners instituted the production cuts Jan. 1 for a six-month term, with OPEC reported to have so far achieved better than 80% compliance.

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