WASHINGTON (DTN) -- New York Mercantile Exchange nearest delivery oil futures and Brent crude on the Intercontinental Exchange pushed higher in afternoon trade Wednesday, with the November West Texas Intermediate contract settling above $41 per barrel (bbl). The gains came as traders positioned ahead of the weekly release of U.S. inventory data, with expectations for crude and petroleum stockpiles to have fallen sharply during the week ended Oct. 9 amid supply disruptions caused by Hurricane Delta.
Delayed a day by Columbus Day on Monday, this week's inventory data from the American Petroleum Institute and the U.S. Energy Information Administration is seen as bullish after nearly all the oil production in the Gulf of Mexico was shut-in last week because of Hurricane Delta and operations at several refineries were disrupted by power outages and high winds with the Category 2's landfall near the Texas-Louisiana border. Expectations are for the U.S. refinery run rate to have declined 1.2%, for gasoline stockpiles to have decreased by 1.8 million bbl, and distillate inventories to have declined by 2.9 million bbl last week. Commercial crude oil inventories are likely to have fallen 4.3 million bbl as operators in the offshore Gulf of Mexico shut-in as much as 93% of offshore output because of Hurricane Delta, according to the Bureau of Safety and Environmental Protection.
In the session, November WTI futures jumped past $41 per bbl to settle at $41.04, and the December Brent contract rallied to a $43.32-per-bbl settlement. NYMEX November ULSD futures surged 2.35 cents or 2% to $1.1925 gallon and November RBOB futures added 1.44 cents to $1.1971 gallon.
A weakening U.S. dollar index, which retreated 0.2% against a basket of global currencies to 93.366, lent further support for the WTI contract.
The broader market again focused on the latest news out of Washington, D.C., on stimulus talks between the White House and House Democrats. Stocks on Wall Street fell Wednesday after U.S. Treasury Secretary Steven Mnuchin said the new stimulus package is unlikely before the Nov. 3 election. Mnuchin's comments came after the White House recently proposed a $1.8 trillion aid package, which House Speaker Nancy Pelosi said "falls significantly short" of what is needed.
Wednesday morning, the International Energy Agency left its global demand forecast unchanged at 91.7 million barrels per day (bpd) for 2020 and 97.2 million bpd for the next year, while warning that, should a second wave of coronavirus infections sweep through major economies in the fourth quarter, fuel demand would likely take another hit.
"The trajectory for COVID-19 infections is strongly upwards in many countries, and governments are tightening restrictions on the movements of their citizens. This surely raises doubts about the robustness of the anticipated economic recovery and thus the prospects for oil demand growth," said IEA.
IEA estimates crude stockpiles held by countries that are part of the Organization for Economic Cooperation and Development fell 2.3 million bpd in the third quarter and projects a draw of 4.1 million bpd in the fourth quarter.
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