Oil Futures Shrug Bearish API Data, Lack of OPEC+ Guidance

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 moved higher in pre-inventory trade Wednesday even as market participants eye a slowing economic recovery and rising coronavirus infections domestically and elsewhere, while a lack of guidance from OPEC+ officials on extending productions cuts into the first quarter of next year further stoked fears over deteriorating market's fundaments.

In another sign of glutted supplies, U.S. crude oil inventories rose 4.174 million barrels (bbl) during the week ended Nov. 13, more than three times calls for a 1.2 million bbl increase, while stockpiles at Cushing, the delivery hub for West Texas Intermediate gained 176,000 bbl, said the American Petroleum Institute on Tuesday. The data also showed a surprise 256,000 bbl build in domestic gasoline stocks in the reviewed week and larger-than-expected 5.024 million bbl decline in distillate fuel inventories. Traders now await official supply data from the U.S. Energy Information Administration on tap for 10:30 a.m. ET.

Near 7:30 a.m. ET, the December West Texas Intermediate futures advanced 86 cents to $42.28 bbl, while January Brent futures on ICE added 89 cents to trade near $44.67 bbl. December ULSD futures surged 2.83 cents or more than 2% to $1.2674 gallon, while front-month RBOB futures gained more than 2 cents to $1.1740 gallon.

Tuesday's gains came even as daily coronavirus infections in the United States reset the previous highs at 160,000 new cases on Monday and governors in more than a dozen U.S. states added stricter quarantine restrictions to slow the recent surge. An economic recovery that picked up the pace over the summer months is now seen faltering against the backdrop of the pandemic and the lack of a fiscal stimulus package out of Washington.

U.S. retail sales for October slowed below expectations at 0.3% after surging 1.9% month prior, according to U.S. Department of Commerce.

Federal Reserve Chairman Jerome Powell warned the economy will face a "very challenging next few months" if lawmakers in Washington, D.C. fail to deliver a rescue bill for the millions of struggling businesses and unemployed.

Weekly unemployment claims in the U.S. are projected to tick higher during the week ended Nov. 14 after declining for nearly two months, potentially reversing the partial recovery in a battered labor market.

"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.

Adding more uncertainty for the market, oil ministers from the Organization of the Petroleum Exporting Countries and partners offered no guidance during their technical meeting on Tuesday on whether the producers' group will extend 7.7 million barrels per day (bpd) in production cuts into the first quarter of next year. The original schedule for the agreement called on a 2 million bpd increase in OPEC+ total output beginning on Jan. 1, 2021. Saudi oil minister, Prince Abdulaziz Bin Salman, however, acknowledged the producers' group must remain flexible to market conditions. OPEC+ meets on Nov. 30-Dec. 1.

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

Liubov Georges