Oil Lower in Wednesday Trade
NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures fell Wednesday morning amid profit-taking after Tuesday's rally, with the market recalibrating in front of the weekly oil supply report from the Energy Information Administration due out at 10:30 a.m. ET.
The market recalibration was triggered overnight by a bearish American Petroleum Institute report showing a spike in weekly domestic gasoline stockpiles and a surprise build in distillate supply that dented recent optimism about short-time demand.
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The trade group reported a 9.2 million bbl build in domestic gasoline inventories during the week-ended Dec. 1, while estimates called for a 1.4 million bbl increase.
API also reported that distillate fuel inventories rose by 4.3 million bbl instead of an expected stock draw of 500,000 bbl. Crude stockpiles were drawn down by 5.5 million bbl, surpassing an estimated stock draw of 3.75 million bbl, the report showed.
The market was supported on Tuesday by reports oil production by the Organization of the Petroleum Exporting Countries declined in November. A Reuters' survey showed OPEC has shown strong compliance with their supply cut deal, with its output falling last month by 300,000 bpd to its lowest since May.
Another survey by Bloomberg shows OPEC production fell by 80,000 bpd to 32.47 million bpd in November from October. OPEC's official compliance data will be available in its Monthly Oil Market Report due next week.
OPEC and 10 non-OPEC producers last Thursday (11/30) extended their production agreement under which they will continue to cut output by 1.8 million bpd throughout 2018 to eliminate a global supply glut.
At 9:00 AM ET, NYMEX January West Texas Intermediate crude oil futures dropped 75cts to $56.87 bbl. ICE February Brent crude was 68cts lower at $62.18 bbl, with a $5.31 bbl premium over WTI. NYMEX January ULSD futures fell 1.99cts to $1.8940 gallon, with January RBOB futures 1.76cts lower at $1.7008 gallon.
George Orwel can be reached at george.orwel@dtn.com
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