Oil Futures Continue Rally on Bullish API Inventory Report

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Nearby delivery oil futures on the New York Mercantile Exchange and the Brent contract on the Intercontinental Exchange continued their rally into early trade Wednesday, with the December West Texas Intermediate contract briefly touching $43 barrel (bbl) after inventory data from the American Petroleum Institute released late Tuesday showed total crude and refined products supplies fell over 14 million bbl during the week ended Nov. 6 that included a larger-than-expected 5.147 million bbl drop in commercial crude oil stocks.

If realized in federal data, the reported crude draw would be the second inventory drop above 5 million bbl in the last two weeks, suggesting a continued downtrend in domestic crude supplies. Analysts mostly expected a much smaller 700,000 bbl drawdown during the reviewed week.

The large crude draw was accompanied by a larger-than-expected weekly decrease in refined product supplies, with gasoline stocks falling 3.297 million bbl from the previous week and distillate supplies declining 5.619 million bbl -- nearly five times above estimates.

Traders now await the release of official data from the Energy Information Administration delayed this week until late Thursday morning by Wednesday's observance of Veterans Day in the United States.

In early morning trade, December WTI futures traded more than $1 higher near $42.40 bbl and the January Brent contract on ICE traded at a $45.30 more than two-month high on the spot continuation chart before easing to $44.75 bbl. December ULSD futures rallied more than 3 cents to $1.2840 gallon.

Nearby delivery RBOB futures traded at a one-month high $1.2341 gallon despite a resurgence in COVID-19 infections that are triggering government restrictions on certain businesses in some states. Traders appear to be betting Monday's announced vaccine from Pfizer and BioNtech would limit broad lockdown orders by state governments.

The company announced this week the first immunizations could be administered before the end of the year should the vaccine be cleared by U.S. Food and Drug Administration by the third week of November.

In equities, Dow Jones Industrial Average futures look to gain 200 points at the market open Wednesday, extending the recent rally into sixth straight session. Contracts tied to S&P 500 advanced 0.79% with the NASDAQ up nearly 1% amid a market rotation out of "stay-at-home" stocks.

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

Liubov Georges