Oil Futures Soften in Dull Trade

CRANBURY, N.J. (DTN) -- New York Mercantile Exchange oil futures and the Intercontinental Exchange Brent contract ended Tuesday flat, softening slightly from Monday's nearly four-year high settlements for West Texas Intermediate, Brent and ULSD futures while the RBOB contract ended at a one-month high.

Limited price action comes ahead of weekly data Tuesday afternoon from the American Petroleum Institute and Wednesday morning from the Energy Information Administration, with market estimates calling for inventory builds for crude and gasoline, a draw in distillate fuels and modest decline in the refinery run rate.

Major newswire services indicate the market expects commercial crude stocks in the United States to have increased from 900,000 barrels (bbl) to 2.0 million bbl during the last week of September, with the refinery run rate seen down 0.4% to 0.5% after sinking 5.0% week prior to 90.4% of capacity, according to EIA data, as fall refinery maintenance season got underway.

Gasoline stocks are expected to have increased by 900,000 bbl to 1.3 million bbl, with the EIA last reporting gasoline stocks at 235.7 million bbl as of Sept. 21, a record high for this time of year. Distillate stocks are seen to have been drawn down 1.3 million bbl during the week reviewed, with EIA reporting distillate fuel inventory below the five-year average at a 137.9 million bbl.

Oil futures rallied in opening the fourth quarter on the market view that crude production from major oil producers Saudi Arabia, Russia and the United States would fall short in offsetting lost supply from Iran amid U.S. sanctions that intensify in early November. Global oil inventory is seen being drawn down over the next few months to meet demand requirements, while higher output from the Saudis is seen reducing spare capacity to contend with unexpected supply outages.

In its most recent short-term outlook, the International Energy Agency estimates global oil demand at 100.3 million barrels per day (bpd) in the fourth quarter and oil production from countries that are not part of the Organization of the Petroleum Exporting Countries at 60.5 million bpd.

On Monday, a Reuter's survey determined OPEC crude production edged up 90,000 bpd to 32.85 million bpd in September, with Iranian output down 100,000 bpd. Separately, the news group said Iranian oil exports in September tumbled to a 33-month low at 1.72 million bpd, down 250,000 bpd from August and 1.0 million from April when they peaked.

NYMEX November WTI futures settled down $0.07 at $75.23 bbl, with the ICE December Brent contract $0.18 lower at $84.80 bbl. NYMEX November ULSD futures settled flat, down 3 points at $2.4076 gallon, and November RBOB futures down 6 points at $2.1269 gallon.

Brian L. Milne can be reached at brian.milne@dtn.com

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