NEW YORK (DTN) -- Nearby delivered oil futures on the New York Mercantile Exchange settled mixed on Wednesday, with West Texas Intermediate and ULSD futures reversing lower after the Energy Information Administration released a somewhat disappointing weekly oil supply report.
The EIA's report for the week-ended Oct. 27 detailed stock draws for crude and refined products, although the report was less bullish than data released Tuesday by the American Petroleum Institute. EIA showed a 46,000 bpd increase in domestic crude production to a 9.553 million bpd one-month high, up 1.031 million bpd year-on-year.
EIA also reported a less-than-expected 2.4 million bbl stock draw for crude while distillate supply declined by a less-than-expected 320,000 bbl for the week reviewed. Gasoline stocks in the United States declined a more-than-expected 4.0 million bbl during the final full week of October to a 26-month low at 212.8 million bbl.
The U.S. agency reported a 10,000 bpd decline in refinery crude oil inputs despite a 0.3% rise in refinery runs rates to 88.12% of operable capacity, with implied demand for gasoline rising 147,000 bpd while down 567,000 bpd for distillates for the week reviewed.
"Total petroleum demand did slip back below 20 million bpd and is the lowest for this week since 2012, and even the 4-week moving average slipped below 2015 and 2016," said Houston analyst Kyle Cooper at IAF Advisors. "Demand is a bit bearish and combined with U.S. oil production certainly tempers overall bullishness of the stock changes." Cooper also noted that while gasoline exports slipped, distillate exports surged to a new record of 1.685 million bpd.
The market is concerned that a continued increase in domestic crude production could undermine efforts by the Organization of the Petroleum Exporting Countries to reduce global surplus, said analysts.
OPEC and 10 non-OPEC producers are still expected to extend their 15-month agreement to cut crude output by 1.8 million bpd by nine more months through December 2018. The cuts have been in place since January. The tightening global market has spurred bullish sentiment, with money managers increasing their speculative positions and boosting oil futures in recent weeks.
CME Group, the Chicago-based derivatives marketplace operator, announced this afternoon that WTI light sweet crude futures open interest surpassed 2.5 million contracts for the first time on Tuesday (10/31), reaching a record 2,509,878 contracts and surpassing the previous record of 2,492,940 set Monday while up 20% since the start of the year.
NYMEX December WTI crude futures settled 8cts lower at $54.30 bbl, reversing off a ten-month spot high of $55.22. January Brent on the Intercontinental Exchange settled 45cts lower at $60.49 bbl, reversing off a $61.70 28-month spot high. The Brent premium over WTI closed at $6.16 bbl, down from Tuesday's $6.98 two-year high, with a wider arbitrage supporting U.S. crude exports.
NYMEX December ULSD futures settled 1.80cts lower at $1.8625 gallon, coming off a 28-month spot high of $1.9030. December RBOB futures contract bucked the downward move, holding on to a 0.85cts gain with a $1.7410 gallon settlement.
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