WTI Futures Slide to 1-Month Low

Brian L Milne
By  Brian L. Milne , DTN Refined Fuels Editor

CRANBURY, N.J. (DTN) -- The third consecutive large build in U.S. commercial crude stocks pressed New York Mercantile Exchange November West Texas Intermediate futures below $70 bbl for the first time in October, with front month WTI futures sliding to a one-month low ahead of Wednesday's November WTI options expiry.

Near the noon hour in New York, Nymex November WTI futures were nearly $2.00 lower at $70 barrel (bbl) after trading down to $69.63 bbl.

The Energy Information Administration midmorning reported a 6.5 million bbl build in commercial crude stocks during the week-ended Oct. 12 that pushed inventory to 15-week high at 416.5 million bbl, with stocks above the five-year average for a second straight week. The increase follows a 6.0 million bbl build week prior and 8.0 million bbl increase during the last week of the third quarter.

The large increases in inventory were realized despite a 300,000 barrels per day (bpd) decline in U.S. crude output owing to production shut-ins in the Gulf of Mexico through part of last week because of Hurricane Michael. The large build occurred as exports plunged and imports ramped up for a net-increase of 794,000 bpd.

The backwardation at the front end of the forward curve has collapsed, which is flat from November through March 2019.

The increase in U.S. commercial crude stocks also followed the release of 1.1 million bbl of crude oil from the Strategic Petroleum Reserve, which follows a 1.3 million bbl drawdown in SPR stocks week prior. The pull from SPR follows an auction in August by the Department of Energy in which six major oil refiners won bids for 11.0 million bbl of SPR crude, with those deliveries seen through this month into early November. The SPR release follows congressional action in prior years, with the funds eyed for budget considerations.

December Brent crude on the Intercontinental Exchange tumbled through the $80 bbl psychological benchmark to a $79.17 3-1/2 week low on the spot continuous chart, trading down $1.50 near $79.95 bbl shortly after 12 p.m. ET.

The large crude build overshadowed a 2.0 million bbl drawdown in gasoline stocks that was more than estimated. However, gasoline stocks at 234.2 million bbl remain near a record high for this time of year. An 827,000 bbl decline in distillate stocks was less-than-anticipated by the market.

Nymex November ULSD futures were 3.25 cents lower at $2.3026 gallon, paring a decline to a 3-1/2 week low at $2.2926 gallon. November RBOB futures dropped 5.25 cents to near $1.9245 gallon, edging off a $1.9169 two-day low.

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


Brian Milne