Oil Maintains Upside After EIA Report

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures continued higher in midmorning trade Wednesday after the Energy Information Administration reported stock draws across the board, although the U.S. agency's report was less bullish than a separate oil report issued late Tuesday by the American Petroleum Institute.

The EIA's Weekly Petroleum Status Report for the week-ended Oct. 27 detailed a less-than-expected 2.4 million bbl stock draw for crude oil, and showed gasoline stocks declined by a more-than-expected 4.0 million bbl. Distillate supply fell by a less-than-expected 320,000 bbl during the week reviewed.

The API a day earlier reported stock draws of 5.1 million bbl for crude oil, 7.7 million bbl for gasoline and 3.1 million bbl for distillates. EIA also reported 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. On demand, the EIA reported a negligible decline in refinery crude oil inputs despite a modest increase in refinery runs rates, with implied demand rising 147,000 bpd for gasoline while falling 567,000 bpd for distillates.

"The demand is a bit bearish and combined with US oil production certainly tempers overall bullishness of the stock changes," said analyst Kyle Cooper at IAF Advisors in Houston.

Aside from weekly U.S. oil supply data, the futures complex has been supported in the past several weeks by a bullish psychology driven by expectations that the Organization of the Petroleum Exporting Countries and their 10 allied nonmember producers would extend its agreement to cut crude production by 1.8 million bpd through December 2018 instead of allowing it to expire at the end of March 2018. The cuts have been in place since January.

At 11:00 AM ET, NYMEX December West Texas Intermediate crude futures were 17cts higher at $54.55 bbl, off a ten-month spot high of $55.22. ICE January Brent was up 10cts at $61.04 bbl, off a $61.70 28-month high on the spot continuation chart.

NYMEX December ULSD futures contract was 0.15cts higher at $1.8820 gallon, off a new 28-month spot high of $1.9030. The December RBOB futures contract was up 2.84cts at $1.7609 gallon, near a session high of $1.7708.

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