WTI, Brent Higher after Monday's Data Driven Pressure


   
    

   WASHINGTON, D.C. (DTN) -- Following a mixed session Monday triggered by 
weaker-than- expected economic data in the United States and China, West Texas 
Intermediates futures nearest delivery on the New York Mercantile Exchange and 
Brent crude traded on the Intercontinental Exchange rallied in overnight trade, 
propelled by assumptions of a rapidly tightening global oil market, with gains 
in petroleum products demand this winter seen far outpacing growth in global 
oil production.

   Near 8:45 AM ET, NYMEX WTI for November delivery, which expires Wednesday 
afternoon, climbed above $83 bbl, gaining $0.53. The December contract traded 
with $0.82 discount to the soon to expire contract. December Brent futures on 
ICE pared gains to trade near $84.74 bbl after topping $85 bbl in overnight 
trade. November RBOB futures on the NYMEX fell 1.39cts to trade near $1.2423 a 
gallon, and front-month ULSD futures slipped 0.34cts to $2.5458 a gallon.

   Early morning gains in the oil complex also came on the back of a rapidly 
weakening U.S. dollar index that fell more than 0.38% against basket of foreign 
currencies after domestic industrial production fell sharply last month. The 
Federal Reserve on Monday reported industrial output fell 1.3% in September, 
with Hurricane Ida-caused disruptions along Louisiana Coast responsible for 
0.6% of the September decline. Ongoing shortages of semiconductors led to a 
7.2% plunge in the production of motor vehicles and parts and caused more than 
half of the drop off in factory output last month. Weaker industrial data was 
compounded by rising production expectations on Monday, with crude output from 
the Permian basin of Texas and New Mexico seen growing by 62,000 bpd to 4.8 
million bpd from October to November, the Energy Information Administration 
said in its drilling productivity report. Total oil output from seven major 
shale formations is expected to rise 76,000 bpd to 8.29 million bpd in the 
month. U.S. crude production increased 100,000 bpd to 11.4 million bpd during 
the first week of October, according to the most recent data available from the 
EIA, with the agency last week projecting U.S. output would average 11.3 
million bpd this year.

   Meanwhile, the number of active oil-directed rigs in the United States 
increased by 12 in the most recent week, lifting the total rig count to 445, 
240 more than during the comparable week a year ago. Last week's increase, 
while the largest one-week uptick since the first week of April, marked the 
sixth straight increase. Producers have added 51 rigs since Hurricane Ida 
forced as many as 16 rigs offline in late August, early September.

   WTI and Brent futures returned to the upside in overnight trade on 
expectations that excess demand from gas-to-oil power switching in the European 
Union and Asia this winter would far outpace production gains in the U.S. and 
OPEC+ nations. OPEC, along with Russia-led partners, agreed earlier this month 
to lift their output by 400,000 bpd in November, maintaining their July 
agreement of monthly increases of 400,000 bpd through the year as they unwind 
production cuts put in place in April 2020 in response to the COVID-19 pandemic 
led crash in world oil demand.

   The International Energy Agency estimates that global oil demand would grow 
by additional 500,000 bpd this winter should energy shortages in Asia and the 
EU to worsen during the winter months.

    

   Liubov Georges, 1.646.359.4088, liubov.georges@dtn.com, www.dtn.com.




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