NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures were mixed with an upside bias, with West Texas Intermediate crude and Brent on the Intercontinental Exchange higher ahead of the U.S. Energy Information Administration's report that's expected to show stock draws for domestic crude oil inventories.
The EIA's Weekly Petroleum Status Report for the week-ended Nov. 17 is due out at 10:30 a.m. EST, and the market will scrutinize its production data for clues to whether the recent increases in output continues.
Late Tuesday, the American Petroleum Institute reported a larger-than-expected weekly crude oil stock draw. The API's data for the week-ended Nov. 17 showed a 6.36 million barrel (bbl) draw for crude inventories versus the expected draw of 3.6 million bbl.
The crude stockpiles at the Cushing, Oklahoma, delivery point for WTI crude were down 1.8 million bbl. It comes amid continuing outage of Keystone Pipeline oil flow from Canadas Alberta oil sands to the United States.
Pipeline operator TransCanada Corp. announced an 85% drop in crude oil deliveries via Keystone after a spill of 5,000 bbl last week in South Dakota, and the outage is expected to last through to the end of this month. The outage helped push up oil futures.
API also reported middle distillates supply declined by 1.67 million bbl while gasoline supply unexpectedly posted a build of 869,000 bbl. The market expected stock draws of 1.75 million for distillates and 750,000 bbl for gasoline.
Meantime, the Organization of Petroleum Exporting Countries and their 10 non-OPEC allies are expected to extend their production cuts of 1.8 million barrels per day (bpd) beyond the March 2018 deadline. The producers will meet in Vienna on Nov. 30 for a summit to discuss market conditions and the way forward, and there's an emerging consensus they will prolong the cuts through the end of 2018.
OPEC Secretary General Mohammad Barkindo said this morning that OPEC is on the path to rebalancing the market, as global oil supply overhang was coming down to their five-year average.
Markets will be closed on Thursday for the U.S. Thanksgiving holiday and so some of the rally is short-covering ahead of the holiday. Most of the traders who won't return to work till next week are trying to fulfill their requirements ahead of time.
At last look, NYMEX January WTI crude futures rallied 99 cents to $57.82 bbl, off a near 29-month high of $58.05. ICE January Brent crude jumped 57 cents to $63.14 bbl, off a one-week high of $63.39. The Brent premium over WTI narrowed to $5.32, the narrowest spread in a month.
December ULSD futures edged up 0.98 cent to $1.9457 gallon and December RBOB futures contract eased 0.21 cent to $1.7710 gallon, reversing lower after posting a one-week high of $1.7825.
George Orwel can be reached at firstname.lastname@example.org
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