Oil Futures End Wednesday Mixed

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled mixed with West Texas Intermediate crude giving up midsession gains and falling for the third straight day despite a largely bullish weekly report from the Energy Information Administration.

The EIA report showed a steep stock draw for crude oil and record high crude exports in the final week of September that also marked the end of the third quarter, which initially supported the WTI contract before the market quickly shifted focus to bearish crude production data and weekly declines in demand for crude and gasoline. RBOB and ULSD futures posted moderate gains, lifted by strong exports.

"The EIA report was overall supportive for the market except for higher crude production, which got people thinking supply will bounce back," said analyst Phil Flynn at Prices Futures Group. "The market is trying to look beyond and is putting this report into perspective because we are in the shoulder months and refinery runs rate was disappointing." Others agreed.

"Overall, [this is] a bullish report, but the drop in total demand is somewhat concerning," said Houston-based analyst Kyle Cooper at IAF Advisors, adding that, "Gasoline and distillate exports were higher and certainly continues to underline the global competitive advantage of U.S. refiners."

The EIA report detailed a 6.0 million bbl crude stock draw to 465.0 million bbl, down for the fifth straight week during the week-ended Sept. 29, with stocks 0.9% lower than a year ago. U.S. crude exports reached a record high near 2.0 million bpd last week while imports fell 213,000 bpd.

EIA also reported a 14,000 bpd rise in production to a better than two-year high of 9.561 million bpd, suggesting U.S. producers are stepping up oil drilling activity, with higher output seen weighing on the market for some time.

The EIA report was mixed on products detailing a 1.6 million bbl stock build for gasoline as implied demand for the fuel tumbled to 1.6% below a year ago. The report showed a surprise 2.6 million bbl stock draw for distillates as implied demand for the fuel soared 261,000 bpd, 3.4% higher than a year ago.

Earlier in the session, the market came under pressure from the restart today of Libya's biggest oilfield after a two-day downtime. However, Russia's willingness to allow for an extension of their agreement with the Organization of the Petroleum Exporting Countries to cut 1.8 million bpd in output through December 2018 limited the market's downside, as did comments by OPEC that they were committed to rebalancing the market.

At settlement, NYMEX November WTI crude contract was down 44cts at $49.98 bbl, reversing off a session high of $50.67. December Brent crude futures on the Intercontinental Exchange eased 20cts to $55.80 bbl settlement, closing at a $5.82 bbl premium to WTI.

November ULSD futures climbed 2.34cts to $1.7739 gallon, off a $1.7776 three-week spot high. November RBOB futures were 1.50cts lower at a $1.5805 gallon settlement, narrowing its premium to the December contract to 1.2cts.

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