Oil Futures Mixed Before EIA Data

NEW YORK (DTN) -- Spot-month oil futures on the New York Mercantile Exchange were mixed Wednesday morning as traders recalibrate their expectations ahead of a weekly oil supply report by the Energy Information Administration due out at 10:30 a.m. EST.

The futures complex was supported during overnight trade into premarket trade after the American Petroleum Institute reported a more-than-expected stock draw for crude oil in the United States, offsetting estimates of rising U.S. crude oil production.

The trade group late Tuesday reported a 7.4 million bbl crude oil stock draw for the week ended Dec. 8, surpassing an estimated 4.0 million bbl decline. Crude oil supply at the Cushing delivery point in Oklahoma was drawn down by 2.7 million bbl. The trade group also reported stock builds of 2.3 million bbl and 1.5 million bbl in gasoline and distillate stocks.

The Organization of the Petroleum Exporting Countries released its Monthly Oil Market Report this morning that had both bullish and bearish data. It showed total OPEC-14 crude production averaged 32.45 million bpd in November, down 133,000 bpd over the previous month and the lowest output rate in six months.

At the same time however, the OPEC report revised up expectations for non-OPEC supply for both this year and in 2018, driven by higher-than-previously projected U.S. production growth. OPEC now forecasts non-OPEC supply growth for 2018 at 990,000 bpd, revised higher by 120,000 bpd from its November outlook, for total non-OPEC supply to 58.81 million bpd.

U.S. crude production in 2018 is expected to grow by 720,000 bpd to average 9.96 million bpd, and NGLs are forecast to increase by 310,000 bpd to average 4.02 million bpd, the oil cartel said.

On Tuesday, EIA's Short-term Energy Outlook showed expectations of global oil demand increasing by 1.62 million bpd in 2018, up from growth of 1.39 million bpd in 2017. EIA also sees global oil production growth of 2.1 million bpd in 2018.

The market will also keep watch over the economy that has shown strength in the United States and China, which would support demand for oil products. U.S. Federal Reserve is expected to announce a hike in the federal funds rate this afternoon amid economic optimism, which should boost the dollar, with oil prices often trading inverse with the greenback.

At 9:00 AM ET, NYMEX January West Texas Intermediate crude oil futures were 24cts higher at $57.38 bbl. ICE February Brent was 19cts higher at $63.53 bbl.

NYMEX January ULSD futures eased 0.52cts at $1.9284 gallon and January RBOB futures eased 0.24cts at $1.6952 gallon.

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