WTI Futures Shake Off Crude Build, Stimulus Talks Stall

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Except for the nearby-month RBOB contract, oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange posted little change on Wednesday despite government data showing a massive 15.2 million barrel (bbl) crude build and sagging demand for refined fuels during the week ended Dec. 4, suggesting inventory levels will continue to rise in coming weeks as states accelerate coronavirus restrictions.

Further weighing on the markets, fiscal stimulus talks in Washington, D.C., hit another roadblock Wednesday after House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer rejected a $916 billion proposal from the White House. The Democrat leaders justified the move on the grounds that it offered no federal unemployment insurance supplement, despite it including a one-time $600 direct payment to most Americans. Senate Leader Mitch McConnell lashed out over the gridlock Wednesday, accusing Democrats of obstructionism and causing delays for millions of Americans to get federal help.

"There is a huge list of helpful policies that both sides agree on," McConnell said on the Senate floor. "This need not be rocket science. But we can't do a thing unless the Democrats decide they actually want to make a law."

Earlier reports suggested McConnell backed off his demands for businesses immunity from coronavirus-related lawsuits in return for Democrats backing away from demands for state and local aid.

Major equity indexes slumped on Wednesday and the U.S. dollar gained some ground as investors gauged through disheartening headlines coming out of Washington, D.C. The Dow Jones Industrial Index tumbled more than 200 points on the session and the S&P 500 fell 1.03%. The U.S. dollar gained 0.12% against the basket of global currencies to trade above 91 in afternoon dealings.

Wednesday's inventory report was bearish, detailing a 24.6 million bbl increase in domestic crude and refined product supplies during the week ended Dec. 4, with 15.2 million of that build occurring in commercial oil inventories. What's even more worrisome for domestic producers, crude oil exports fell to 1.8 million bbl in the week reviewed, the lowest since October 2018. The sharp drop in crude exports could suggest sluggish demand for oil exports in other markets despite having plenty of crude for sale. Demand for gasoline dropped 373,000 barrels per day (bpd) from the previous week to 7.60 million bpd -- the lowest demand since local governments across the U.S. started to gradually ease the first round of lockdown measures.

Gasoline stockpiles increased for the fourth week in row though Dec. 4, climbing 4.5 million bbl to 237.9 million bbl -- the highest since Aug. 23. The build was smaller than 6.442 million bbl reported by the American Petroleum Institute on Tuesday, lending some support for the front-month RBOB futures.

Demand for distillate fuels also eroded 400,000 bpd from the previous week to 3.389 million bpd, with inventories rising 5.2 million bbl to 151.1 million bbl, widening a surplus against the 5-year average to 13%.

On the session, NYMEX January WTI futures posted little change to finish at $45.52 bbl and the Brent contract on the Intercontinental Exchange settled at $48.86 bbl. NYMEX January ULSD futures declined 78 cents to $1.3989 gallon and January RBOB futures advanced 2 cents to $1.2759 gallon.

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

Liubov Georges