Market Report & Analysis for 10/4/2018 Morning Edition

Morning Market Overview

Oil futures on the New York Mercantile Exchange nearest to delivery and the front month Brent contract on the Intercontinental Exchange edged lower from Tuesday’s shallowly mixed session ahead of weekly supply data for the United States to be released midmorning, and following bullish statistics released late Tuesday afternoon by the American Petroleum Institute.

API said commercial crude stocks increased 907,000 bbl during the week- ended Sept. 28 that was below market estimates, with the supply build concentrated at the Cushing supply hub in Oklahoma, which jumped 2.018 million bbl. Cushing is the delivery location for NYMEX West Texas Intermediate futures. The Washington, D.C.-based trade organization said gasoline stocks in the United States were drawn down 1.703 million bbl that contrasted with expectations for a build between 800,000 bbl and 1.3 million bb.

API reported a 1.197 million bbl draw in distillate fuel that was slightly below estimates. The Energy Information Administration will release its weekly report at 10:30 AM ET.

Softer oil futures also follow reports that Saudi Arabia and Russia had agreed to lift their oil production through year end ahead of the late September meeting by the Organization of the Petroleum Exporting Countries and non-OPEC oil producers aligned with OPEC in a 2016 production agreement, and told the United States of their intention. Brent crude and WTI futures rallied to nearly four-year highs in opening the fourth quarter Monday on concern sliding output from Venezuela and U.S. sanctions on Iranian oil exports that start on Nov. 4 would create a global shortfall of available supply.

Estimates vary on the effect U.S. sanctions will have in shutting down Iran’s oil exports, with Boston-based ESAI Energy putting the figure at a drop of 1.1 million bpd.