Futures Movers: Oil prices turn higher as EIA data reveal the first U.S. crude-supply decline in 6 weeks

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Oil futures turned higher on Wednesday after a U.S. government report showed a decline in U.S. crude supplies for the first time in six weeks.

“The trifecta of a rebound in refining activity, strong exports and lower imports has resulted in a draw to crude inventories,” despite another release from the U.S. Strategic Petroleum Reserve, said Matt Smith, director of commodity research at ClipperData.

“Solid draws to the products round out a supportive report,” he told MarketWatch. “The peak of fall maintenance appears behind us, with higher refinery runs and ongoing low net imports ahead of us.”

December WTI crude CLZ19, +1.60%, on its first full session as a front-month contract, rose 87 cents, or 1.6%, at $55.35 a barrel on the New York Mercantile Exchange. Prices were likely to mark their highest settlement so far this month.

Global benchmark Brent crude for December BRNZ19, +1.46%, meanwhile, added 63 cents, or 1.1%, to $60.33 a barrel on the ICE Futures Europe exchange. Prices for the front-month contract haven’t settled at or above $60 since Oct. 11.

The Energy Information Administration on Wednesday reported that U.S. crude supplies fell for the first time in six weeks, down 1.7 million barrels for the week ended Oct. 18. Separately, supplies of oil from the SPR fell by 1 million barrels for the week.

Crude supplies were forecast to increase by 4.7 million barrels, according to analysts polled by S&P Global Platts. The American Petroleum Institute on Tuesday reported a rise of 4.45 million barrels.

The EIA data showed supply declines of 3.1 million barrels for gasoline and 2.7 million barrels for distillates. The S&P Global Platts survey showed expectations for supply decreases of 2 million barrels for gasoline and 3 million barrels for distillates.

On Nymex, November gasoline RBX19, +1.73%  climbed by 2.4 cents, or 1.5%, to $1.6329 a gallon and November heating oil HOX19, +0.40%  added a penny, or 0.5%, to $1.9532 a gallon.

November natural gas NGX19, +1.06%  edged up 1.3 cents, or 0.6%, to $2.285 per million British thermal units. On average, analysts surveyed by S&P Global Platts expect the EIA on Thursday to report that supplies of the fuel in storage climbed by 92 billion cubic feet.

That would be more than the 62 billion cubic foot rise see in the same week a year ago, and above the five-year average rise of 73 billion cubic feet, according to S&P Global Platts.

While the crude and crude-product supply “numbers were definitely bullish…we do feel we are basically quite range bound in the energy complex,” said Tariq Zahir, managing member at Tyche Capital Advisors. In the fourth quarter, “we do feel we will see demand to get weaker and prices, barring any supply outages, to get weaker as we go forward.”

On Tuesday, markets were upbeat on crude prices amid reports that members of the Organization of the Petroleum Exporting Countries and their allies would consider making further reductions to crude output when they meet in December because of growing concerns about a slowdown in growth for oil demand, Reuters reported Tuesday, citing sources from the oil-producing club.

“Let the pre-OPEC meeting headline game of ping pong begin, but remember to treat unnamed sourced headlines with a grain of salt,” said Stephen Innes, Asia Pacific market strategist at AxiTrader, in a Wednesday research note.

On Wednesday, Russian Energy Minister Alexander Novak said there were no formal proposals to change the terms of the output-cut agreement, according to Reuters.

Crude has been pressured lower by worries about the world’s appetite for oil during an economic slowdown that is enveloping much of the developed world.

“Worries over the global crude demand persist, particularly from Asia’s colossal oil importers like China, South Korea and Japan, whose manufacturing engines continue to sputter,” said Innes. “Added to the picture, the cartel has also lost tremendous market share to the United States, whose booming shale output has transformed it into the world’s biggest oil producer as well as a net exporter.”

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