Futures Movers: Oil futures move mostly higher a day after touching multiyear intraday highs

18237500 - businessman hand pointing to investment as concept

Oil futures traded mostly higher on Tuesday but lacked momentum, a day after the U.S. benchmark crude contract touched its highest intraday level in about seven years amid signs the Organization of the Petroleum Exporting Countries and its allies are struggling to meet output quotas.

“The soft economic data, both in China and the U.S., weighed some on the demand outlook for the weeks and months ahead as weaker demand would at least partially offset the tailwind of the deeper [supply] deficit in the physical market,” analysts at Sevens Report Research wrote in Tuesday’s newsletter.

U.S. industrial production fell a sharp 1.3% in September, the Federal Reserve reported Monday. Meanwhile, GDP data on Monday showed that China’s economy grew 4.9% in the third quarter from a year prior, down steeply from the second quarter’s 7.9% rate.

Meanwhile, U.S. home builders started construction on homes at a seasonally-adjusted annual rate of 1.56 million in September, representing a 1.6% decrease from the previous month, U.S. Census Bureau reported Tuesday.

“Bottom line for oil, futures just notched their eighth-consecutive weekly rise and prices are technically overbought with WTI in the low $80s here,” they said. The dominant trend in the energy market is still bullish” but for now, support for the U.S. benchmark lies near $79 a barrel .

West Texas Intermediate crude for November delivery

rose 4 cents, or less than 0.1%, to $82.48 a barrel on the New York Mercantile Exchange. The contract, which touched an intraday high of $83.87 on Monday — the highest since October 2014 — expires at the end of Wednesday’s trading session. December WTI

the most actively traded contract, was up 8 cents, or 0.1%, at $81.77 a barrel.

December Brent crude

the global benchmark, traded at $84.44 a barrel on ICE Futures Europe, up 11 cents, or 0.1%. Brent on Monday pushed above $86 a barrel to hit a three-year intraday high, but retreated to finish slightly lower.

But crude was back on the rise Tuesday on expectations supplies will remain tight, said Carsten Fritsch, analyst at Commerzbank, in a note. A report from Reuters on Monday said that OPEC+ countries were 115% in compliance with output cuts in September, showing that members are struggling to meet targets after the group agreed earlier this year to ease production restrictions in monthly increments of 400,000 barrels a day.

Read: Why soaring oil prices could soon make the stock market sputter

Even if OPEC+ hit its target, it wouldn’t be enough to plug the gap between demand and supply, Fritsch said. The compliance shortfalls mean that OPEC has made less supply than agreed over the past three months, coming up short by around 750,000 barrels a day in September alone, he noted.

“This is attributable to production problems in Angola and Nigeria that will not be resolved anytime soon,” Fritsch wrote. “For as long as Saudi Arabia and other countries with sufficient spare capacities are unwilling to offset these outages by stepping up their own output, OPEC+ is also likely to produce less oil than agreed in the coming months, thereby keeping supply tight.”

The oil market awaits weekly data on petroleum supplies, with official data due out from the Energy Information Administration on Wednesday.

On average, analysts expect US. crude supplies to climb by 2 million barrels for the week ended Oct. 15, according to a poll conducted by S&P Global Platts. They also forecast weekly inventory declines of 2.2 million barrels for gasoline and 2.4 million barrels for distillates.

On Nymex Tuesday, November gasoline

was down 0.4% at $2.478 a gallon and November heating oil

shed 0.4% to $2.54 a gallon.

November natural gas

traded at $4.926 per million British thermal units, down 1.2% and poised to settle at the lowest since Sept. 22, FactSet data show.

What's your reaction?

In Love
Not Sure

You may also like

Leave a reply

Your email address will not be published. Required fields are marked *

More in:News