Crude Futures Flat Tuesday

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 settled Tuesday's session shallowly mixed. Tuesday's OPEC+ Joint Ministerial Monitoring Committee meeting concluded with no recommendation in extending production cuts of 7.7 million barrels per day (bpd) into the first quarter next year even as global oil demand is widely expected to slow amid a worsening COVID-19 outbreak across major global economies.

"OPEC and non-OPEC countries should be fully prepared to act in the requirements of the market," said JMMC after ministers acknowledged global demand has taken a hit from renewed COVID-19 containment measures across the continents, including full lockdowns in the European Union. While the meeting ended without a formal recommendation oil ministers from Saudi Arabia and Russia have suggested delaying a step down in the OPEC+ production cuts to 5.7 million bpd on Jan. 1, 2021.

"OPEC+ needs to be ready to tweak the deal if needed," reiterated Saudi Energy Minister Prince Abdulaziz bin Salman.

Deepening cuts appear unlikely, as Iraq has missed compliance targets and Nigeria formally requested a reclassification of one of its crude grades to condensate, which would allow for higher output. Now, the debate appears centered on whether an extension of the current production cut would be three months of six.

OPEC+ will meet on Nov. 30-Dec. 1.

In the latest sign of a slowing recovery, U.S. retail sales came in well below expectations at 0.3% in October, with sales of core products, which exclude autos, gasoline and building materials, registering almost no growth at 0.1% from the previous month.

"We are watching to see if weakness in retail sales translates into something deeper. It is possible some people are starting to run out of money, reaching the edge," said Raphael Bostic, president of the Federal Reserve Bank of Atlanta.

Oxford Economics expects real spending growth to fall below 1% after a record 8.9% surge in the third quarter.

Absent a fiscal stimulus package out of Washington, phase two of the recovery is set to slow even further in the final weeks of the year as colder weather and a resurgence in coronavirus cases further squeeze incomes for millions of American households.

Separately, U.S. crude oil inventories last week likely added 1.2 million barrels (bbl), gasoline stocks to have fallen 300,000 bbl, and distillate fuel stocks to have declined by 1.7 million bbl, according to market expectations.

American Petroleum Institute will release its weekly inventory report 4:30 p.m. EST, followed by official statistics from the U.S. Energy Information Administration at 10:30 a.m. EST on Wednesday.

At settlement, December West Texas Intermediate futures finished little changed at $41.43 per bbl ahead of December options expiry, while January Brent futures on ICE slipped to $43.75 per bbl. December ULSD futures gained 1.02 cents to settle at $1.2391 per gallon, while front-month RBOB futures added 0.64 cent to $1.1532 per gallon.

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

Liubov Georges