CRANBURY, N.J. (DTN) -- New York Mercantile Exchange oil futures nearest delivery and the Brent contract on the Intercontinental Exchange settled mostly down on Tuesday, with a modest 21 points gain by the December RBOB contract the exception. Higher oil production and growing inventories again clobbered the crude grades despite Monday's resumption of U.S. sanctions on Iranian oil exports after a nearly three-year hiatus.
The Energy Information Administration in their Short-Term Energy Outlook released Tuesday afternoon revised 2018 world production up by 1.22 million bpd to 100.09 million bpd from its projection in October. EIA also said U.S. production growth was 400,000 bpd higher in October than they anticipated last month at 11.4 million bpd, while noting crude production in "Saudi Arabia and Russia reached some of the highest levels in history last month."
"These supply developments have occurred when global refinery maintenance is typically at its highest for the year, contributing to an estimated global petroleum inventory build of 2.0 million bpd in October," said EIA.
EIA's outlook also included sizeable downward revisions in their price forecasts for West Texas Intermediate and Brent for this year and in 2019, while Morgan Stanley lowered its fourth quarter Brent price projection by $7.50 to $77.50 bbl.
This outlook comes on the heels of revelation late last week that the United States would grant eight countries waivers to continue buying Iranian oil despite Monday's start of sanctions on those sales. The countries include some of Iran's best customers, with China, India, Japan, South Korea, Turkey, Taiwan, Italy and Greece all granted 180 days to buy Iranian oil. That runs counter to the Trump administration's forceful push to drop Iranian oil sales to zero.
U.S. Secretary of State Mike Pompeo said the waivers were temporary, and follow sharp declines in their Iranian oil purchases up to now, as well as helping on "many other fronts." Pompeo added that 20 countries received waivers during previous sanctions under the Obama administration from 2012 to 2015. U.S. President Donald Trump said they would go slow so as not to "shock" the global economy.
Iran's oil exports are down about 1.0 million bpd from the roughly 2.5 million bpd in April, and are expected to range somewhere between 1.0 and 1.5 million bpd in November.
NYMEX December WTI futures settled at a fresh seven-month low on the spot continuous chart at $62.21 bbl, down $0.89. ICE January Brent settled $1.04 lower at $72.13 bbl, a more than 11-week low on the spot chart.
NYMEX December ULSD futures settled down 0.8cts at $2.1883 gallon, but held to inside trade. Cold weather is forecast to move into the eastern United States next week, with the National Oceanic Atmospheric Administration's Climate Prediction Center calling for below normal temperatures in the Northeast from Nov. 12 to 20. The Northeast represents the largest concentration of homes and small business using heating oil for their space heating needs across the globe.
NYMEX December RBOB futures settled up 0.21cts at $1.6940 gallon, reversing off a fresh nearly nine-month low on the spot continuous chart of $1.6610 gallon.
Brian L. Milne can be reached at firstname.lastname@example.org
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