Oil Futures End Mixed; WTI Rallies

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled mixed Wednesday afternoon, with West Texas Intermediate crude rallying to a 29-month high on the back of data showing a weekly crude stock draw in the United States. RBOB and ULSD futures settled slightly lower on unexpected stock builds in refined products.

The Energy Information Administration's petroleum status report for the week ended Nov. 17 showed crude oil supplies tumbled by 1.9 million bbl last week to 457.1 million bbl, 6.5% lower year-on-year. The draw was accompanied by higher short-term demand, with refinery crude inputs up 199,000 bpd for the week, as refinery runs edged up 0.3% to 91.3% of operable capacity.

On products, EIA reported gasoline stocks unexpectedly rose by 44,000 bbl, with distillate stocks unexpectedly gaining 269,000 bbl. Imports and output also rose for both products.

Gasoline demand surged 423,000 bpd and distillates demand edged up 28,000 bpd for the week. Demand improved ahead of U.S. Thanksgiving, when millions are expected to travel for the holiday.

AAA last week projected 50.9 million Americans will travel 50 miles or more from home this Thanksgiving, up 1.6 million or 3.3% compared with last year and marking the most Thanksgiving travelers since 2005.

One bearish part of the EIA data was that domestic crude production, a closely watched data-point, continued higher, rising 13,000 bpd last week to 9.658 million bpd, up 968,000 bpd from a year ago and the highest in about 46 years.

Also, the number of active oil rigs in the U.S. rose by nine to 747 during the week ended Wednesday, 273 higher than a year ago, Baker Hughes said this afternoon.

NYMEX WTI futures contract was also supported by continued downtime on TransCanada's Keystone pipeline following last week's oil leak in South Dakota, and on the prospect of the Organization of Petroleum Exporting Countries and their 10 non-OPEC allies extending their production cuts of 1.8 million bpd beyond the March 2018 deadline.

OPEC and non-OPEC producers will meet on Nov. 30 in Vienna. There's an emerging consensus they will prolong the cuts through the end of 2018. OPEC Secretary General Mohammad Barkindo said OPEC is on the path to rebalancing the market, as global oil supply overhang was coming down to their five-year average.

Meantime, TransCanada Corp. announced an 85% drop in crude deliveries via Keystone from Canada after a spill last week in South Dakota, and the outage is expected to last through to the end of this month. The outage helped push up WTI oil futures.

Markets will be closed on Thursday for the U.S. Thanksgiving holiday and so some of the WTI rally was due to short-covering ahead of the holiday. Most of the traders who won't return to work till next week were trying to fulfill their requirements before heading out.

NYMEX January WTI crude futures settled $1.19 higher at $58.02 bbl, off a 29-month high of $58.09. ICE January Brent crude settled 75cts higher at $63.32 bbl, off a one-week high of $63.43. Brent premium over WTI narrowed to $5.30, the narrowest spread in 2-1/2 months.

December ULSD futures settled down 0.33cts to $1.9326 gallon, reversing off a three-day high of $1.9543. December RBOB futures contract eased 0.52cts to $1.7679 gallon at settlement, reversing lower after posting a one-week high of $1.7825.

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