Oil Finds Bottom Ahead of Weekly Data

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 crude on the Intercontinental Exchange settled higher, finding a bottom if only temporary after extensive selling that pressed the West Texas Intermediate contract to a one-year low after 12 consecutive down days -- a record.

The advance followed the monthly outlook from the International Energy Agency released Wednesday morning that, along with the Energy Information Administration and the Organization of the Petroleum Exporting Countries, revised higher expected oil output for non-OPEC producers for both this year and 2019 from their October projections. However, IEA maintained their view on global oil demand for both years, indicating consumption growth would "remain solid" as lower oil prices offset slowing economic growth.

Today's gains by oil futures came alongside a weakening U.S. dollar, which traded at a 17-month high on Monday, while major U.S. equity indices were headed for another loss. The Dow Jones Industrial Average is on course to erase nearly 900 points this week, down more than 200 points in late afternoon trading.

The advance comes ahead of weekly supply data from the American Petroleum Institute this afternoon and EIA's weekly supply report due out at 11 a.m. ET Thursday, with both reports delayed a session by Monday's observance of Veterans Day.

Market expectations are generally aligned that a build in commercial crude stocks and draws in oil products occurred during the week-ended Nov. 9. Commercial crude stocks are seen to have increased by about 2.5 million bbl last week, with a 1.5 million bbl draw in gasoline stocks eyed. Distillate inventory are seen to have declined by 2.0 million bbl for the week profiled.

In addition to record high crude production last reported at 11.6 million barrels per day (bpd) and ongoing refinery maintenance despite moving past the season's peak turnaround period, commercial crude stocks might show a larger-than-expected build because of a draw from the Strategic Petroleum Reserve. The Department of Energy sold 11.0 million barrels (bbl) of SPR crude in August with deliveries to be made in late October and early November. So far, 5.3 million bbl of that supply has been delivered, leaving another 5.7 million bbl to flow out of emergency supply caverns.

NYMEX December WTI futures settled up $0.56 at $56.25 bbl with three trading sessions remaining for December delivery, set to expire at Monday's (11/19) close of trading. The January contract settled at a $0.19 premium to the expiring contract. ICE January Brent settled up $0.65 at $66.12 bbl.

NYMEX December RBOB futures settled 1.79 cents higher at $1.5606 gallon, with the December ULSD futures contract ending up 3.34 cents at $2.0959 gallon.

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

(CZ)

Brian Milne