CRANBURY, N.J. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange were mixed early Thursday, consolidating above this week's multi-month lows ahead of weekly supply data from the Energy Information Administration.
The pause in the nervous market follows a recent selloff over doubt about global oil demand and rapidly rebuilding stocks that have washed away worry over a tight market in the current quarter, with those concerns remaining despite the drop back in valuation. October's whipsaw reversal to the downside followed by 12 consecutive session losses for West Texas Intermediate have elevated anxiety for oil futures traders, while a number of banks caught sideways in their hedges for clients accelerated Tuesday's selloff according to Goldman Sachs cited in a Bloomberg report.
The selloff came despite the weekend news that Saudi Arabia in December would cut 500,000 barrels per day (bpd) in production from a record-high rate of 10.63 million bpd in October, and reports OPEC is considering a 1.4-million-bpd production cut in 2019 ahead of their Dec. 6 biannual meeting in Vienna. OPEC crude production reached a 22-month high of 32.9 million bpd in October.
The International Energy Agency in their Oil Market Report released Wednesday said commercial oil inventory held by the 35 country bloc Organization for Economic Cooperation and Development restocked at a 630,000 bpd rate in the third quarter, and expects global refinery output to exceed demand in the current quarter and into 2019.
Reports of the planning for lower OPEC production drew the ire of U.S. President Donald Trump this week, with the market thinking Trump has an outsized influence in setting OPEC policy. Those thoughts were reinforced by Russia's oil minister, Alexander Novak, who said the global oil market is balanced and sought caution in adjusting output quotas. However, Russian President Vladimir Putin is quoted in saying Russia needs to cooperate with OPEC on oil production rates.
The EIA is set to release its weekly report on U.S. supply at 11 a.m. EST, which follows the late-Wednesday data release from the American Petroleum Institute. API reported a much larger-than-expected 8.79 million barrel (bbl) build in commercial crude stocks for the week ended Nov. 9. The impetus for the build might be due to a release of crude from the Strategic Petroleum Reserve, with the Department of Energy set to deliver 5.7 million bbl of SPR crude following an August auction.
API also reported an 188,000 bbl build in gasoline stocks against expectations for a drawdown, while a 3.22 million bbl build in distillate stocks was more-than-expected.
In early trading, NYMEX December WTI futures were up $0.55 at $56.80 bbl ahead of the contract's expiration Monday, Nov. 19, with January delivery trading at a $0.20 to $0.25 premium to the December contract. ICE January Brent futures were up $0.70 near $66.80 bbl.
NYMEX December ULSD futures were down 1.7 cents near $2.0800 gallon, with the December RBOB contract up 1.3 cents near $1.5735 gallon.
Brian L. Milne can be reached at firstname.lastname@example.org
© Copyright 2018 DTN/The Progressive Farmer. All rights reserved.