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Oil Mixed After EIA Report, Poised for Steep Monthly Loss

October 31, 2018 at 17:33 by Andrew Moran

Crude oil futures are mixed midweek after the US government reported a weekly increase in supplies that matched market expectations. Oil prices are also on track for their biggest monthly decline in more than two years, but they are still up a whopping 14% year-to-date.

December crude oil futures tacked on $0.06, or 0.09%, to $66.24 per barrel at 17:10 GMT on Wednesday on the New York Mercantile Exchange. Crude prices fell just under 13% this month, making it the largest monthly dip since July 2016.

Brent, the international benchmark for oil prices, is trading lower in the middle of the trading week. December Brent crude futures slipped $0.18, or 0.24%, to $75.73 a barrel. Brent will also end the month 12% lower, but it has advanced 19% so far in 2018.

According to the US Energy Information Administration (EIA), domestic inventories climbed by 3.2 million barrels for the week ending October 26, which is on par with the market forecast of 3.3 million barrels. This is the sixth consecutive week of weekly gains. Gasoline supplies shed 3.2 million barrels, while distillate stockpiles dropped 4.1 million barrels.

The Baker Hughes total rig count stood at 1,068, up from 1,067 a week ago.

There have been two factors that have contributed to crude’s October demise. The US continues to ramp up their production levels and the Organization for Petroleum Exporting Countries (OPEC) might increase their output to offset the inevitable production decrease by Iran amid US sanctions that go into effect on November 4. Meanwhile, there are concerns that there might be a dip in global demand because of the escalating trade war worldwide.

A surging US dollar is playing a factor in crude’s recent tumble. On Wednesday, the US dollar edged up 0.14% to 97.14, rising roughly 1.4% in October, which is the best monthly performance in five months. A stronger buck is bad for dollar-priced commodities because it makes it more expensive for foreign investors to purchase.

In other energy markets, December natural gas futures soared $0.085, or 2.65%, to $3.27 per million British thermal units (btu). December gasoline futures slid $0.017, or 0.96%, to $1.785 a gallon. December heating oil futures tacked on $0.015, or 0.68%, to $2.27 per gallon.

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