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Petroleum industry

Oil Futures Climb Amid Decline in Stockpiles and Strong Economic Data

Strategic Insights

— 2 min read

The Department of Energy reported a 3.4 million barrel drop in oil inventories, marking the biggest week-to-week decline since July, while gasoline and distillate stocks also fell below expectations. This increased demand and tightening supplies in the oil market led to a 35-cent, or 0.4%, rise in light, sweet crude for December delivery to $87.07 a barrel. Strong economic data, including a decline in initial unemployment claims and a strengthening U.S. dollar, also contributed to the price rally.

Key Takeaways:

  • Oil futures climbed 35 cents, or 0.4%, to $87.07 a barrel on the New York Mercantile Exchange after the Energy Department reported a 3.4 million barrel drop in oil inventories.
  • The decline in oil stocks marked the biggest week-to-week drop since July 9, with stockpiles falling to their lowest level since July.
  • Gasoline stocks dropped 1.9 million barrels, while distillate stocks, including heating oil and diesel, fell 5 million barrels, both exceeding expectations.
  • Refinery use rose 0.6 percentage points to 82.4%, indicating improved refining activity.
  • Oil stocks at Cushing, Okla. fell 5.2% in the week ended Nov. 5, the biggest week-to-week decline on a percentage basis since Oct. 2, 2009.
  • Tightening supplies at the Nymex delivery point provided an incentive to buy the front-month contract, leading to a 47-cent narrowing of the spread between the front-month contract and January futures.
  • The price rally occurred despite a strengthening U.S. dollar, which typically has an inverse relationship with oil prices.
  • The ICE dollar index rose to 78.085 from 77.443, but this did little to dampen oil demand.
  • Initial unemployment claims decreased by 24,000 to 435,000, the lowest in four months, as reported by the Labor Department.
  • Front-month December reformulated gasoline blendstock (RBOB) traded up 1.99 cents, or 0.9%, to $2.2049 a gallon.
  • December heating oil gained 1.86 cents, or 0.8%, to $2.4253 a gallon.

Statistics:

  • The 3.4 million barrel drop in oil inventories marked the biggest week-to-week decline since July 9.
  • Oil inventories fell to their lowest level since July.
  • Gasoline stocks dropped 1.9 million barrels.
  • Distillate stocks fell 5 million barrels.
  • Refinery use rose 0.6 percentage points to 82.4%.
  • Oil stocks at Cushing, Okla. fell 5.2% in the week ended Nov. 5.
  • The narrowing of the spread between the front-month contract and January futures to 47 cents was the narrowest since August.
  • The ICE dollar index rose to 78.085 from 77.443.

Sources:

  • Dow Jones Commodities News via Comtex
  • Energy Department's Energy Information Administration (EIA)
  • Labor Department
  • New York Mercantile Exchange (Nymex)
  • ICE futures exchange
  • Dow Jones Newswires
  • Dan Strumpf, Dow Jones Newswires; 212-416-2818; dan.strumpf@dowjones.com

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