DTN Oil

WASHINGTON (DTN) -- Nearby delivery oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange traded on either side of unchanged early Wednesday, with the international crude benchmark trading near $50.70 per barrel (bbl) bolstered by better-than-expected economic data out of the Eurozone and optimism that a stimulus deal would be reached in Washington by the end of the year after Republican and Democrat leaders made positive overtures on the progress of contentious talks.

Broader risk-on sentiment across financial markets helped to offset a surprise 1.973 million bbl build in domestic crude oil supplies and a larger-than-expected 4.762 million bbl increase in distillate stockpiles during the week ended Dec. 11. The preliminary data released Tuesday by the American Petroleum Institute also showed a build in gasoline inventories, up 828,000 bbl on the week, although smaller than a 1.6 million bbl increase estimated by analysts.

Energy Information Administration will release official data on last week's change in U.S. crude and petroleum product stocks at 10:30 a.m. ET.

In early trading, NYMEX January West Texas Intermediate contract edge up 5cts to trade $47.62 bbl, and Brent crude for February delivery gained 10cts to $50.86 bbl. The front-month ULSD contact slipped 0.48 cents to $1.4592 gallon and January RBOB futures gained 0.28 cents to $1.3296 gallon.

Eurozone's economic data for early December beat market expectations, suggesting the pandemic induced fourth quarter downturn could be less severe than previously thought. At 49.8 reading, eurozone's flash composite purchasing managers' index increased nearly 5 points from November's five-month low and exceeded consensus by 8.5 points. German manufacturers, in particular, posted a strong showing of 58.6, a better-than-two year high, while services also nudged higher from a five-month low 45 reading in November.

"The data hint at the economy close to stabilizing after having plunged back into a severe decline in November amid renewed COVID-19 lockdown measures," said Chris Williamson, chief business economist at IHS Markit.

Domestically, the Federal Open Market Committee is scheduled to release its latest economic projections for the U.S. economy at 2 p.m. ET, with the market to pay close attention to any revisions to the central bank's near-term outlook. In September, the Fed projected the economy to contact by 3.7% in 2020, followed by a 4% rebound next year and for the unemployment rate to drop to 5.5% by the end of 2021.

Short-term picture for the U.S. economy has deteriorated sharply since the FOMC last met in September as COVID-19 cases surged and local governments announced another round of shutdowns. U.S. retail sales to be released shortly for instance are projected to decline 0.3% in November after expanding each month since April's plunge to a negative 6.1%.

Investors are also looking for signs of progress on stimulus talks from lawmakers on Capitol Hill after House Speaker Nancy Pelosi invited both Republican and Democrat leaders for another round of negotiations. Pelosi's outreach came after a bipartisan group of lawmakers released a stimulus proposal that would split a previous plan for $908 billion aid into two parts. The new plan calls for $748 billion in spending for programs that are acceptable on both sides of the aisle, including an additional $300 per week in federal unemployment benefits and another $300 billion for more loans under the Paycheck Protection Program.

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

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