WASHINGTON, D.C. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange (NYMEX) and Brent crude traded on the Intercontinental Exchange advanced more than 2% on Tuesday. Both crude benchmarks broke above resistance following news that a severe storm in the Black Sea region halted about 2 million barrels per day (bpd) in Russian and Kazakh oil exports from the port of Novorossiysk, while a selloff in U.S. dollar index lent further support for the West Texas Intermediate (WTI)contract.
WTI and Brent snapped three- and four-session losing streaks on Tuesday as traders continued to weigh the potential outcomes of a high-stakes OPEC+ meeting delayed to Thursday. Market focus shifted to a supply disruption in the Black Sea region where severe storms halted operations at the key oil hub of Novorossiysk, leaving more than one million people without electricity along the Crimean Peninsula. Russian news agencies reported the "storm of the century" damaged railways, power lines and key infrastructure projects in the region that could take days, if not weeks, to restore.
The oil terminal of the Caspian Pipeline Consortium on Russia's Black Sea coast and the nearby Novorossiysk facility stopped all crude loadings as of Monday afternoon because of the harsh weather conditions. CPC is a main export route for Kazakhstan's crude oil. It remains unclear when the port could resume operations.
Also on Tuesday, oil traders positioned ahead of the weekly inventory report from the American Petroleum Institute scheduled for 4:30 p.m. ET, followed by official data from the U.S. Energy Information Administration Wednesday morning. A consensus of analysts and traders surveyed by the Wall Street Journal revealed commercial crude stockpiles likely rose 900,000 barrels (bbl) last week to 449 million bbl. If realized, it would mark the sixth consecutive weekly build in nationwide stockpiles that rose by a massive 28.3 million bbl since mid-October.
Gasoline inventories are also expected to have risen by 100,000 bbl, which would bring stocks to 216.5 million bbl, according to the survey. Gasoline stockpiles currently stand about 2% below the five-year average.
Stocks of distillates, meanwhile, are seen to have fallen by 800,000 bbl to 104.8 million bbl.
Refinery run rate likely rose 0.8% in the reviewed week to 87.8% of capacity.
Oil contracts only briefly dipped into the red following media reports suggesting a delayed meeting among OPEC+ ministers could be postponed once again amid difficult negotiations with African producers, namely Nigeria and Angola. Both African producers are resisting lowering their production baseline for next year, according to reports, a move lobbied by Saudi Arabia and Russia. Although Nigeria and Angola have underproduced their allotted quotas since the pandemic disruption of 2020, both nations now target foreign direct investments into their respective oil industries and need a higher production baseline. It's also highly unlikely that the United Arab Emirates would agree to hold off its production increase that is scheduled for January 1, 2024.
Market sources say that at the very least Saudi Arabia and Russia will extend their voluntary production and export cuts of 1.3 million bpd into early 2024, but the withheld supply is not expected to reverse a buildup in global oil inventories projected for the first quarter. Both the Joint Ministerial Monitoring Committee meeting and OPEC/non-OPEC Ministerial Meeting are scheduled for 8 a.m. ET Thursday.
At settlement, January WTI futures advanced $1.55 bbl to $76.41 bbl, with the prompt spread ending in a $0.18 bbl contango. The U.S. dollar sank to a three-month low 102.649 settlement, down 0.44% against a basket of foreign currencies, lending further support for WTI.
Brent for January delivery rallied $1.70 bbl to settle at $81.68 bbl and next-month February delivery finished the session with $0.21 discount to prompt delivery ahead of the January contract's expiration Thursday afternoon.
NYMEX December ULSD futures gained $0.0691 to $2.9070 gallon, with the December RBOB contract advancing $0.0501 to $2.23 gallon.
Liubov Georges can be reached at firstname.lastname@example.org.