Oil futures traded lower Wednesday, under pressure after data from an industry trade group show a rise in U.S. crude inventories.
West Texas Intermediate crude for December delivery was down 69 cents, or 1.7%, at $41.01 a barrel on the New York Mercantile Exchange. December Brent crude, the global benchmark, was off 68 cents, or 1.6%, at $42.48 a barrel on ICE Futures Europe.
The American Petroleum Institute reported late Tuesday that U.S. crude supplies rose 584,000 barrels in the week ended Oct. 16, according to sources. The data also showed gasoline stockpiles fell by 1.6 million barrels, while distillate inventories were down by about 6 million barrels, the sources said. Crude stocks at the Cushing, Okla., storage hub, meanwhile, edged up by 1.2 million barrels for the week, sources said.
More closely followed inventory data from the Energy Information Administration is due Wednesday morning. The EIA data are expected to show crude inventories down by 1.9 million barrels last week, according to analysts polled by S&P Global Platts. They also forecast supply declines of 1.6 million barrels for gasoline and 3 million barrels in distillates.
Despite the pullback, oil bulls still seem to have momentum on their side, said Craig Erlam, senior analyst at Oanda, in a note. That may be due, he said, to “overconfidence” in expectations for another fiscal stimulus package from Washington and ideas that the OPEC+ alliance will take new steps to curb output in coming months as Libyan production continues to ramp up.
OPEC+ is set on Jan. 1 to further relax production curbs put in place earlier this year.
OPEC+ could move to delay the relaxed curbs at any point “and they meet again in December which may be a better time to announce such a move,” he said. “By then they’ll know who the U.S. President is going to be for the next four years, how bad the second wave [of COVID-19 infections] is and how quickly Libya is ramping up production, for example. Still, this confidence in the markets remains overly optimistic and significant risk lies below, as a result. “