CRANBURY, N.J. (DTN) -- Oil futures on the New York Mercantile Exchange nearest to delivery and the front month Brent contract on the Intercontinental Exchange edged lower from Tuesday's shallowly mixed session ahead of weekly supply data for the United States to be released midmorning, and following bullish statistics released late Tuesday afternoon by the American Petroleum Institute.
API said commercial crude stocks increased 907,000 barrel (bbl) during the week-ended Sept. 28 that was below market estimates, with the supply build concentrated at the Cushing supply hub in Oklahoma, which jumped 2.018 million bbl. Cushing is the delivery location for Nymex West Texas Intermediate futures.
The Washington, D.C.-based trade organization said gasoline stocks in the United States were drawn down 1.703 million bbl that contrasted with expectations for a build between 800,000 bbl and 1.3 million bbl. API reported a 1.197 million bbl draw in distillate fuel that was slightly below estimates.
The Energy Information Administration will release its weekly report at 10:30 a.m. ET.
Softer oil futures also follow reports that Saudi Arabia and Russia had agreed to lift their oil production through year end ahead of the late September meeting by the Organization of the Petroleum Exporting Countries and non-OPEC oil producers aligned with OPEC in a 2016 production agreement, and told the United States of their intention.
Brent crude and WTI futures rallied to nearly four-year highs in opening the fourth quarter Monday on concern sliding output from Venezuela and U.S. sanctions on Iranian oil exports that start on Nov. 4 would create a global shortfall of available supply. Estimates vary on the effect U.S. sanctions will have in shutting down Iran's oil exports, with Boston-based ESAI Energy putting the figure at a drop of 1.1 million barrels per day (bpd).
The International Energy Agency projects world oil demand will reach a record high 100.3 million bpd during the current fourth quarter, although some industry followers believe demand growth could slow if oil prices continue higher. Economic headwinds in emerging economies, once a catalyst for boosting world oil demand, could also dent growth expectations.
However, the U.S. economy is strong and expected to remain robust through 2020 according to a report by Goldman Sachs this week and Federal Reserve Chairman Jerome H. Powell on Tuesday who expects the unemployment rate to hold below 4% and inflation to stay near 2% through 2020.
The "economy is strong, unemployment is near 50-year lows, and inflation is roughly at our 2 percent objective," said Powell in a speech in Boston.
Wednesday morning, ADP Payroll Services said 230,000 jobs were added to the U.S. economy in September, well above expectations for the employment report to show job growth of 179,000. The ADP report is an imperfect precursor to the Department of Labor's nonfarm employment report, with September statistics due out Friday morning. The market expects the Department of Labor to report 180,000 jobs were added to the U.S. economy last month and that the unemployment rate dipped from 3.9% to 3.8%.
The U.S. dollar is trading near a three-week high and the Dow Jones Industrial Average is up 120 points after ending Tuesday at a record high 26,773.94.
At 10 a.m. ET, Nymex November WTI futures were down $0.30 near $74.90 bbl, with ICE December Brent $0.25 lower near $84.55 bbl. NYMEX November ULSD futures were down 0.4 cents at $2.4030 gallon, reversing off a fresh near four-year high on the spot continuous chart of $2.4224 traded overnight. Nymex November RBOB futures were down 1.2 cents near $2.1150 gallon, with the seasonal backwardation through January continuing to unwind.
Brian L. Milne can be reached at email@example.com
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