Oil Futures End Down on Tuesday

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

CRANBURY, N.J. (DTN) -- New York Mercantile Exchange oil futures nearest delivery and Brent futures on the Intercontinental Exchange settled down. This was ahead of weekly supply data from the American Petroleum Institute to be released Tuesday afternoon that's expected to show another build in crude supply, with oil futures trading down to multi-week lows on concern over slowing economic growth.

NYMEX December West Texas Intermediate settled at a $66.18 bbl 2-1/2 month spot low, down $0.86, which coincided with an increase in the U.S. dollar to a 2-1/2 month high, with domestic crude and the greenback having an inverse relationship.

The U.S. dollar has strengthened as the U.S. economy, while slowing in the third quarter, continues to outperform other global economies. The Chinese yuan has weakened sharply, sliding to a 10-year low this week. Tuesday morning, the Conference Board reported U.S. consumer confidence soared above expectations to 137.9, holding near an 18-year high, with the all-time high reached in 2000 at 144.7. A strong jobs market is boosting consumer sentiment.

Equities were sharply higher in late Tuesday afternoon trade following the recent selloff on several features highlighted by slowing global economic growth. Eurozone third quarter GDP slowed from 0.4% in the second quarter to a less-than-expected 0.2% annualized growth rate.

The global slowdown is also seen tied to the U.S.-China trade dispute, in which the United States is reportedly ready to escalate the dispute if China doesn't meet certain demands from the United States.

The economic growth concerns directly affect global oil demand, currently expected to average at a record high 100.2 million bpd in the current quarter before sliding to 98.9 million bpd during the seasonally weak first quarter. And while demand is seen sliding, revved up production from Saudi Arabia and Russia are seen offsetting lost supply from Iran amid U.S. sanctions on Iranian oil exports which take effect next week.

ICE December Brent crude, the international crude price marker, settled at a $75.91 bbl nearly 10-week low on the spot continuous chart ahead of the December contract's expiration Wednesday afternoon. January Brent settled at $75.95 bbl.

The market expects U.S. commercial crude supply to have increased 2.9 million bbl during the week-ended Oct. 26, which would mark the sixth consecutive weekly build if reported Wednesday morning by the Energy Information Administration. The EIA last reported commercial crude stocks at a 422.8 million bbl four-month high.

Weekly supply statistics are expected to show a 1.7 million bbl decline in gasoline stocks and a 1.9 million bbl draw from distillate supply for the period profiled. The API will update its data at 4:30 PM ET and the EIA 10:30 AM ET Wednesday.

NYMEX November RBOB futures swung to an eight-month low settlement on the spot continuous chart at $1.8059 gallon, down 1.9 cents, ahead of the contract's expiration Wednesday afternoon. The December contract settled at $1.8023 gallon.

NYMEX November ULSD futures settled down 2.45 cents at $2.2598 gallon ahead of Wednesday's contract expiration, with December ULSD futures settling at near parity with the expiring contract.


Brian Milne