WASHINGTON (DTN) -- New York Mercantile Exchange oil futures and Brent crude on the Intercontinental Exchange ended mixed Tuesday afternoon, with the U.S. crude benchmark settling 0.8% lower in response to news National Security Advisor John Bolton is departing the Trump administration, while downward revisions to the global oil demand forecast from U.S. Energy Information Administration added to the selling pressure.
NYMEX October West Texas Intermediate futures gave back $0.45 to settle at $57.40 per barrel (bbl) after reaching a $58.76 six-week high on the spot continuous chart. ICE November Brent contract dipped $0.21 to end the session at a $62.38 bbl settlement, also falling from a nearly six-week spot high at $63.78 bbl. NYMEX October ULSD futures finished trading with a modest 0.35 cents gain at a $1.9312-gallon settlement, the highest spot price settlement since July 31. The October RBOB contract advanced 0.62 cents to a $1.5908-gallon settlement.
Crude contracts reversed earlier gains after U.S. President Trump fired his third national security adviser, Bolton, a foreign policy hawk on rogue regimes including Iran and Venezuela. Bolton was one of the engineers of tough sanctions against oil exports from both countries, and the market sees his departure as an opportunity for a more lenient approach towards negotiations moving forward.
Oil futures also came under selling pressure after EIA revised lower its projection for world oil consumption in 2019 and 2020 for the fourth consecutive month. In its latest Short-Term Energy Outlook, EIA forecast an increasingly oversupplied market through 2020, even as world oil production was lowered for next year by 50,000 bpd to 102.57 million barrels per day (bpd).
Total world oil supply for 2019 was revised higher by 40,000 bpd to 101.06 million bpd, largely driven by a sizable output increase from non-OPEC suppliers. Agency said crude production from countries of non-OPEC origin would average 65.68 million bpd in 2019, up 120,000 bpd from last month's forecast and 67.89 million bpd next year, revised higher by 90,000 bpd. For countries that are part of the OPEC block, EIA revised crude output lower for both 2019 and 2020. Agency said OPEC production would average 35.38 million bpd, down 70,000 bpd this year and 34.68 million bpd in 2020 on a 160,000-bpd revision from their August forecast.
EIA sees global oil output outpacing consumption by 240,000 bpd in the current year, widening the gap to a sizable 350,000 bpd in 2020. EIA said downward revisions to demand figures partly attributed to slowdown in manufacturing activity around the world, with global economic indicators continuing lower in August. Manufacturing Purchasing Managers' Indices from several countries, which can serve as a leading indicator for economic growth, fell into contraction last month, which included the United States for the first time in three years.
Market participants now await weekly supply figures from American Petroleum Institute set for release 4:30 PM ET. Analysts expect U.S. commercial crude oil inventories to show a 3.6 million bbl decrease for last week to 419.4 million bbl, while gasoline stocks are seen to have declined 1.4 million bbl and distillate stocks to have risen 220,000 bbl in a week reviewed. EIA will publish official data on U.S. crude and petroleum stocks 10:30 a.m. ET Wednesday.
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