OIL FUTURES: Crude holds lower as market remains focused on rising supply narrative

Crude oil futures remained heavy in midmorning trading Nov. 17 as concerns of rising near-term global supply offset a resumption of US inventory draws.

At 1547 GMT, NYMEX December WTI was down $1 at $79.76/b and ICE January Brent was 70 cents lower at $81.73/b.

Total US commercial crude oil inventories declined 2.1 million barrels to 433 million barrels in the week ended Nov. 12, US Energy Information Administration data showed Nov. 17. The counter-seasonal draw put US stockpiles more than 7% behind the five-year average for this time of the year, opening the widest deficit to the average since mid-September.

American Petroleum Institute data released late Nov. 16 had shown a 655,000-barrel rise in US crude oil inventories in the week to Nov. 12, but analysts surveyed by S&P Global Platts Nov. 15 had called for a 2.5 million-barrel draw over the period.

Notably, inventories at the NYMEX delivery point of Cushing, Oklahoma, climbed 220,000 barrels to 26.6 million barrels. The increase ended five consecutive weeks of Cushing draws that saw storage levels at the site drain more than 9 million barrels since early October.

But oil futures markets were largely unmoved by the tightened US inventories amid a focus on slackened global supply.

The International Energy Agency predicts that the oil market will be oversupplied in 2022 as year-end supply from non-OPEC producers is anticipated to be 2 million b/d higher than at the end of 2021. The IEA predicts that oil demand will not reach prepandemic levels by the end of 2022, anticipating that oil demand will be only 1.4 million b/d higher than expected year-end demand in 2021.

Meanwhile, media reports from the virtual summit between US President Joe Biden and President Xi Jinping of China said Biden has requested that China release oil from its state reserves to stabilize crude oil prices. This has further raised expectations of a short-term increase in supply.

NYMEX December RBOB was down 3.64 cents at $2.3133/gal and December ULSD was 2.16 cents lower at $2.4093/gal.

Total US gasoline stocks declined 710,000 barrels to 212 million barrels while distillate stocks fell 820,000 barrels to 123.69 million barrels, the EIA said.