Oil Futures Lower Ahead of Expiries, EIA Inventory Data

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Heading into the last trading day of the third quarter, oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange eroded further overnight, with the U.S. crude benchmark falling to a one-week low below $39 per barrel (bbl) ahead of weekly inventory data from the Energy Information Administration, with consensus calling for U.S. commercial crude oil supplies to have increased and refiners to further cut run rates on expected slowdown in refined fuel demand in the fall season.

U.S. crude oil inventories have been on steady decline since midsummer, falling in the most recent week to the lowest level since early April at 494.4 million bbl, according to the EIA data. With the fall months this year expected to see weaker-than-usual fuel demand, traders are now worried crude stocks will start building again. Analysts forecast crude oil supplies likely to have increased by about 1.7 million bbl during the week ended Sept. 25, while both gasoline and distillate stocks decreased. Contrary to expectations, data from the American Petroleum Institute reported crude supplies actually fell a modest 831,000 bbl during the reviewed week.

Near 7:30 a.m. ET, November West Texas Intermediate futures slipped 26 cents to trade just above $39 bbl at $39.04 bbl, with November Brent futures on ICE falling a steeper 56 cents to $40.53 bbl ahead of expiration Wednesday afternoon. The December Brent contract held a $0.66 premium to the expiring contract. NYMEX October ULSD futures traded little changed $1.1100 gallon ahead of contract expiration Wednesday afternoon, with the prompt spread at a 0.59 cents contango. October RBOB futures plummeted $1.1815 gallon, while the November contract held a 2.94 cents discount to the expiring contract.

The U.S. Dollar Index bounced 0.25% higher against a basket of global currencies to 94.14 as equities retreated following the first U.S. presidential debate between President Donald J. Trump and contender former Vice President Joe Biden that once again raised the risk of a contested election in November.

The economic calendar for Wednesday includes the ADP National Employment Report for September, due out 8:15 a.m. ET, and the final reading on the second quarter U.S. gross domestic product at 8:30 a.m. ET.

Economists expect the ADP report to show that U.S. private employers added 605,000 jobs to payrolls in September after job growth of 428,000 in August.

As for GDP, the consensus calls for a contraction of 31.7% in the second quarter, unchanged from the previous estimate.

Internationally, three out of Libya's seven onshore oil ports have reopened this week and began crude loadings for exports, according to Bloomberg. Libya's crude output has already risen to at least 250,000 barrels per day (bpd) from roughly 90,000 bpd since the partial lifting of a blockade, with analysts from JP Morgan and Goldman Sachs forecasting output would rebound to at least 500,000 bpd by the end of the year.

Liubov Georges can be reached at liubov.georges@dtn.com

Liubov Georges