Oil futures headed lower Wednesday morning, with prices easing back a second day in a row from a nearly three-year high, after trade group the American Petroleum Institute reported an unexpected increase in weekly U.S. crude supplies.
Traders await official petroleum inventory data from the Energy Information Administration due out at 10.30 a.m. Eastern.
“The oil rally is taking a bit of a pause…as there is a perception that the market has gone up too fast and the fact that we saw builds in the American Petroleum Institute (API) supply report,” said Phil Flynn, senior market analyst at The Price Futures Group.
In Wednesday dealings, November West Texas Intermediate crude
fell 28 cents, or 0.4%, to $75.01 a barrel on the New York Mercantile Exchange, following a modest loss of 0.2% on Tuesday.
November Brent crude
the global benchmark, lost 49 cents, or 0.6%, to $78.60 a barre on the ICE Futures Europe exchange, ahead of its expiration at the end of Thursday’s trading session. The most active December Brent contract
shed 43 cents, or 0.6%, to $77.92.
Prices for both WTI and Brent crude settled Monday at the highest levels for a front-month contract since October 2018.
The decline for prices follow data from the API late Tuesday showing that U.S. crude supplies rose by 4.1 million barrels for the week ended Sept. 24, defying most expectations for a decline, according to sources.
The API also reportedly showed inventory increases of nearly 3.6 million barrels for gasoline and 2.5 million barrels for distillates.
On average, analysts expect the EIA Wednesday morning to report a decline of 4.5 million barrels in domestic crude inventories for the week ended Sept. 24, along with a climb of 700,000 for gasoline and a fall of 2.2 million barrels for distillate stockpiles, according to a survey conducted by S&P Global Platts.
“The overall fundamentals for oil and products are extremely bullish as supplies of almost everything energy has tight supplies around the globe,” said Flynn, in a daily report. “Demand for products and energy [are] rising as recent lockdowns around the globe due to the delta variant of the COVID-19 plague are being lifted.”
Among the petroleum products, October gasoline
was nearly flat at $2.202 a gallon and October heating oil
declined by 0.2% to $2.284 a gallon. The October contracts expire at the end of Thursday’s session.
November natural gas
traded at $5.581 per million British thermal units, down 5.1%, after settling Tuesday at the highest since February 2014 with supplies in the U.S. tight ahead of the winter heating season.
The Organization of the Petroleum Exporting Countries and their allies, together known as OPEC+, are scheduled to meet on Monday review the oil market and discuss oil production plans.
The group is likely to maintain its current plan to add 400,000 barrels per day to its November output, even as Brent crude prices have recently climbed to highs above $80 a barrel, Reuters reported on Wednesday, citing comments from sources.
In early September, OPEC+ agreed to keep its July deal in place, to raise overall production by 400,000 barrels a day each month from August and eventually erase the output curbs put in place last year to offset weaker demand driven by economic restrictions tied to the pandemic.