Crude Futures Steady on Deeper Cuts, Expected Crude Draw
12/10 7:43 AM
Crude Futures Steady on Deeper Cuts, Expected Crude Draw WASHINGTON, D.C. (DTN) -- Oil futures on the New York Mercantile Exchange and the Brent contract on the Intercontinental Exchange slipped in early trade Tuesday, while still holding near the top of the recent trading range on a deeper-than-expected 1.7 million bpd in production cuts by the Organization of the Petroleum Exporting Countries and partners and supportive economic data in the United States, while markets eye a two-day policy meeting by the Federal Open Market Committee which begins today. Markets also await weekly supply data on last week's change in U.S. crude and petroleum stocks, with calls for a hefty 2.9 million bbl decrease in crude supply, while distillate inventories are estimated to have increased by 2.7 million bbl and gasoline stocks by 2.9 million bbl on the week. American Petroleum Institute will release preliminary figures 4:30 PM ET, followed by official figures from U.S. Energy Information Administration 10:30 AM ET on Wednesday. Also, this week major forecasting agencies will release their monthly market reports, starting with Short-term Energy Outlook by EIA 12 PM ET on Tuesday. This will be followed by a monthly report from OPEC, where the cartel will provide an update on compliance on production quotas by members on Wednesday. On Thursday, Paris-based International Energy Agency will release an updated projection on the global supply-demand disposition for 2020. Near 8:15 AM ET, NYMEX January West Texas Intermediate futures slipped $0.37 to $58.65 bbl and ICE February Brent contract shed $0.43 at $63.82 bbl. NYMEX January ULSD futures retreated 0.65cts to $1.9377 gallon, and January RBOB futures fell 1.09cts to $1.6439 gallon. Oil futures moved marginally lower in early trade Tuesday amid a set of competing factors, including new aggressive targets by the OPEC+ alliance and a lack of news regarding negotiations for a phase one U.S.-China trade deal ahead of a looming deadline for additional tariffs on Dec. 15. Markets took note of bearish export data out of China this week, detailing a fourth consecutive monthly decline in November driven by a slump in trade volumes with the United States. The recent data has elevated fears that unresolved trade conflict would further slow global economic growth and demand for oil in 2020. Domestically, market expectations are for the central bank to hold interest rates steady at the conclusion of their two-day FOMC meeting Wednesday after cutting rates for three straight times this year. At each of the last three Fed meetings in July, September and October, the Feds cut the federal funds rate by 25 basis points, which now stands between 1.5% and 1.75%. Oil complex continue to draw support from larger-than-expected 500,000 bpd cut to ongoing production agreement by the OPEC+ alliance. Saudi Arabia provided an added bonus, surprising the market by announcing a voluntarily cut of 400,000 bpd to last through the first quarter of 2020, holding its output below 9.744 million bpd. If abided, the new agreement will lead to 2.1 million bpd in production curbs early next year, with OPEC+ scheduled to meet again on March 5-6 to review their agreement. Liubov Georges, 1.646.359.4088,, (c) 2019 DTN. All rights reserved.
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