Oil Futures at Multi-Week Lows

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures deepened losses Wednesday led by a selloff in oil products in reaction to a bearish report from the U.S. Energy Information Administration showing higher domestic refined oil product inventories that stirred concern over short-term demand.

EIA's Weekly Petroleum Status Report showed a 6.8 million bbl stock build for gasoline during the week-ended Dec. 1, nearly five times the expected 1.4 million build although it trailed the 9.2 million bbl build shown in the American Petroleum Institute report issued late Tuesday.

WPSR also detailed a 1.7 million bbl distillate stock build versus an expected draw of 500,000 bbl, but below a build of 4.3 million bbl reported by API.

WPSR showed a draw of 5.5 million bbl nationwide, more than an expected crude stock decline of 3.75 million bbl but in line with the API's report. Domestic crude oil production rose again, up 25,000 bpd to a fresh 46-year high of 9.707 million bpd, the WPSR data showed.

"Clearly, the product builds are bearish of cracks and the higher distillate output is also bearish," said analyst Kyle Cooper at IAF Advisors. "While the product cracks are lower, the magnitude of the decline is not all that severe. Gasoline exports fell and gasoline demand declined. U.S. oil production continues to climb and is now above 9.7 million bpd and will continue to advance."

Rising U.S. crude output is seen as an impediment to efforts by the Organization of the Petroleum Exporting Countries and their 10 nonmember producer allies to eliminate excess global supply. The producers last week extended their production cuts to December 2018.

At last look, NYMEX January West Texas Intermediate crude oil futures contract tumbled $1.28 to $56.34 bbl, off a $56.26 two-week low. ICE February Brent crude dropped $1.18 to $61.68 bbl, off a $61.60 two-week spot low.

NYMEX January ULSD futures plummeted 4.54cts to $1.8685 gallon, near a $1.8670 four-week spot low. January RBOB futures dropped 4.75cts to $1.6709 gallon, near a $1.6704 fresh five-week low on the spot continuation chart.

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