NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures were higher Wednesday morning, boosted by a bullish oil report by the American Petroleum Institute and continuing talk by the Organization of the Petroleum Exporting Countries to extend their production cuts for much longer than previously thought.
In its oil report for the week-ended Sept. 15 issued late Tuesday, the API showed crude oil inventories in the United States rose by a less-than-expected 1.44 million barrels (bbl), as Gulf Coast refineries resuming operations after Hurricane Harvey increased runs that boosted crude demand.
The API report also showed gasoline and middle distillate fuel stocks both drawn down by a more-than-expected 5.06 million bbl and 6.1 million bbl, respectively, amid strong demand for refined oil products.
The Energy Information Administration will issue its weekly oil report at 10:30 a.m. EDT today.
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The market is also increasingly focusing on OPEC ahead of its meeting on Friday to review its compliance with the 1.2 million barrels per day (bpd) in output cuts agreed to last fall and implemented this year alongside 558,000 bpd non-OPEC production cuts.
In particular, Tuesday's comments by Iraq's oil minister Jabar al-Luaibi has caught market attention and is providing a new level of support to the oil futures complex because it suggests OPEC and 10 nonmember producers are mulling a range of options.
One of the options includes extending the production cuts by three months beyond the current March 2018 deadline. Some members are, however, suggesting a full-year extension until the end of 2018, while others are of the opinion that those cuts should be increased by 1%, said al-Luaibi.
As for Iraq's position, he said the need to prolong the cuts does not appear urgent, but it may become necessary at a later date when he would support the measure.
At 9 a.m. EDT, NYMEX October WTI crude contract was up 52 cents at $49.48 bbl and continues to test resistance at $50.42 ahead of its expiration at the closing bell this afternoon. Traders continue to square their positions ahead of the expiration. The November WTI contract was up 51cts at $50.41 bbl.
November Brent crude on the Intercontinental Exchange gained 54 cents to $55.68 bbl, trading at a $5.68 bbl premium to WTI, up 42 cents from where the trans-Atlantic arbitrage closed on Tuesday.
NYMEX October ULSD futures nudged 0.66 cent higher to $1.7792 gallon and October RBOB futures contract was a tad higher at $1.6557 gallon. The October RBOB contract narrowed its premium with the November contract to about 4.25 cents gallon, which is still wide which indicates strong short-term demand for gasoline.
George Orwel can be reached at firstname.lastname@example.org
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