DTN Oil

WASHINGTON (DTN) -- New York Mercantile Exchange oil futures and Brent crude traded on the Intercontinental Exchange settled Thursday's session higher, with the West Texas Intermediate December contact reversing off a six-week low $77.08 per barrel (bbl) on the spot continuation chart. The gains came as investors assessed the potential impact of a coordinated release from OECD petroleum oil reserves, with the Biden administration reportedly calling for a joint action among oil-consuming countries to lower energy prices ahead of the winter months.

At settlement, NYMEX WTI futures for December delivery added $0.65 to $79.01 per bbl after trading at a six-week low $77.08 per bbl earlier in the session and the January contract narrowed its discount to $0.60 per bbl. ICE January Brent crude advanced $0.96 to $81.24 per bbl settlement. Both benchmarks fell as much as 3% on Wednesday.

NYMEX RBOB December futures gained 1.4 cents to $2.2943 gallon and front-month NYMEX ULSD added 1.96 cents to $2.3840 gallon settlement.

Media airwaves on Thursday were hit with reports that the White House has asked some of the world's largest oil-consuming nations, including China, India and Japan, to tap into their petroleum reserves to relieve pressure on prices in the winter months. Earlier this month, the Biden administration was reportedly considering the idea of a unilateral release of U.S. Strategic Petroleum Reserves, a move that would likely have only a limited impact on the market. Considering the short-lived impact on prices today, even a coordinated sale of OECD stockpiles would do little to change the market's sentiment.

The oil complex only briefly came under selling pressure from reports that China is now carrying out a second public auction of state crude oil reserves although no specific details on the size of that sale were released. China rolled out its first release from reserves in September, which was equal to roughly 7.38 million bbl. Analysts estimate the second SPR release will likely match the sale from two months ago. Energy Aspects estimates China's state oil reserves hold about 220 million bbl of crude oil, equivalent to 15 days of demand.

The International Energy Agency forecasted this week that the tide in the oil markets is already turning towards oversupply, with producers like the U.S., Saudi Arabia and Russia rapidly increasing output. "World oil supply is set to rise 1.5 million barrels per day (bpd) over November and December, with the U.S. providing 400,000 bpd of the gain," said IEA in its latest Monthly Oil Market Report. "Saudi Arabia and Russia combined would account for 330,000 bpd in line with OPEC+ targets. Total oil supply had already leapt 1.4 million bpd month-on-month in October after the U.S. rebounded from Hurricane Ida."

The American Petroleum Institute today in its latest Monthly Statistical Report said domestic crude oil production rebounded to 11.4 million bpd in October following September shutdowns in the wake of Hurricane Ida.

Potentially supportive for the oil complex was Wednesday's release of U.S. inventory data from Energy Information Administration showing domestic crude-oil supplies declined by a hefty 2.1 million bbl through Nov. 12 as refiners hiked run rates and producers unexpectedly cut output by 100,000 bpd. Furthermore, gasoline stockpiles declined by 707,000 bbl from the previous week while demand for the fuel remained above 9.2 million bpd, about 100,000 bpd above the five-year average. If gasoline demand follows pre-COVID seasonality, it would trend lower through the fourth quarter before a final surge amid the Christmas holiday.

EIA data for last week showed distillate stocks fell 824,000 bbl and are now about 5% below the five-year average. Distillate demand extended higher for a second consecutive week to 4.350 million bpd, gaining 70,000 bpd and directionally in line with a 0.2% increase seen in DTN Refined Fuels Demand data.

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