Oil Little Changed as Storage Drawdown Fails to Impress Traders

Updated on
  • U.S. crude, gasoline stocks dropped less than industry tally
  • OPEC’s production declined in October from September

Oil settled near an eight-month high after a closely watched U.S. government report showed smaller-than-expected declines in domestic crude and gasoline stockpiles.

Futures closed down 0.2 percent in New York after earlier topping $55 a barrel for the first time since early January. The government’s tally of oil and gasoline held in U.S. storage tanks failed to register withdrawals as large as those reported by the industry-funded American Petroleum Institute on Tuesday.

The federal figures released on Wednesday “came in not quite as strong as API, which was extremely bullish,” Brian Kessens, who helps manage $16 billion in energy assets at Tortoise Capital Advisors LLC, said by telephone.

A 5.2 percent October rally in the benchmark U.S. crude grade was largely fueled by the determination of Saudi Arabia, Russia and other major oil producers to extend output curbs well into 2018. While a formal decision to extend the caps may not be made at a Nov. 30 meeting, it’ll come sooner or later, according to PIRA Energy Group, a unit of S&P Global Platts. Meanwhile, overall OPEC production dropped 180,000 barrels a day in October from September to 32.59 million a day, data shows.

West Texas Intermediate crude for December delivery fell 8 cents to settle at $54.30 a barrel on the New York Mercantile Exchange, just pennies off the Tuesday close at a level not seen since February.

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Brent for January settlement slipped 45 cents to end the session $60.49 on the London-based ICE Futures Europe exchange. The international benchmark traded at a premium of $5.98 to January WTI.

The Standard & Poor’s 500 Energy Index rose as much as 1.5 percent with Devon Energy Corp., Concho Resources Inc. and Cimarex Energy Co. leading the pack.

U.S. Inventories

Nationwide crude stockpiles slid by 2.44 million barrels last week, while gasoline supplies edged lower by 4.02 million, according to the Energy Information Administration report released Wednesday. The figures were below a 5.09 million barrel drop in crude and a 7.7 million decline in gasoline that the American Petroleum Institute was said to report Tuesday.

Oil inventories at the key Cushing, Oklahoma, pipeline hub ticked higher by 90,000 barrels last week and domestic crude production increased. Distillate supplies slid to levels not seen since 2015 and U.S. crude exports rose for a third week, the EIA data showed.

The crude and gasoline draws weren’t “as big as anticipated. It wasn’t consistent with the API,” James Williams, president of London, Arkansas-based energy researcher WTRG Economics, said by telephone. “We’ve had a strong run in oil prices. It’s time to get a little bit of a pull-back.”

Oil-market news:

  • Iraq oil exports from its northern Kurdish region to Turkey fell to 216,000 barrels a day Wednesday, according to port agent information.
  • Exxon Mobil Corp.’s Baton Rouge refinery in Louisiana shut five units after an early morning fire in a reformer, according to a person familiar with operations.

— With assistance by Heesu Lee, and Grant Smith

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