Oil finishes higher ahead of U.S. supply data

 

Another up day for oil futures as they reversed early losses on Tuesday and closed higher for the day as traders waited on the latest information about U.S. crude inventories and wondered about the continuing impact on supplies by the COVID-19 pandemic.

West Texas Intermediate crude for September delivery finished 69 cents or 1.7% higher at $41.70 a barrel on the New York Mercantile Exchange. Trading had been as low as $40.14.

October Brent crude, the global benchmark ended with a 28-cent gain or 0.6% at $44.43 a barrel on ICE Futures Europe.

“Oil again rejected the sub-$40-a-barrel area as talk starts to circulate that we could see a significant draw down in U.S. crude oil inventory,” said Phil Flynn, analyst at Price Futures Group, in a note to MarketWatch. “The whisper numbers are becoming louder as a historic drop in U.S. oil production, as well as a plunge in U.S. oil imports, could set the stage for another historical crude oil supply draw.”

U.S. crude inventories fell 10.6 million barrels last week, the largest drop of the year. The American Petroleum Institute, an industry trade group, is expected to release its weekly estimate of inventories late Tuesday afternoon, while the Energy Information Administration’s more closely watched data is due Wednesday morning.

Analysts surveyed by S&P Global Platts, on average, look for EIA crude inventories to show a fall of 4.1 million barrels, while gasoline stocks are forecast to decline 1.3 million barrels and distillate supplies are seen rising 100,000 barrels.

“Market calls of draws anywhere from 4 million barrels to 12 million barrels are being thrown around, and it will be interesting to see if the draw is on the massive side, will it shock the oil trade out of its recent tight trading range,” Flynn said.

However, the number of new U.S. cases of COVID-19 on Monday was below 50,000 for a second day, The Wall Street Journal noted, with some of the most hard-hit states showing a slowdown in infections. Worries about the continued spread of the virus in the U.S. and elsewhere have been seen as a negative for refining margins, which could crimp demand for crude.

India serves as an illustration of the “fragile state of demand,” wrote analysts at JBC Energy, a Vienna-based consulting firm, in a Tuesday note. A combination of higher retail prices and lockdown measures that have been extended to the end of the month have served to curtail diesel demand by around 20% year-over-year, they said.

“There remains a distinct possibility of this kind of effect proliferating elsewhere in the region, with more stringent lockdown measures having since been reimposed in parts of the Philippines and Australia, and a higher likelihood that Vietnam will also see some kind of restrictions soon,” they wrote.

Some of the local stocks of interest showed increased stock values.

Devon Energy finished Tuesday up 49 cents or 4.62% at $11.09 per share.

SandRidge Energy was up 2 cents for a 1.25% increase to finish at $1.62.

Ovintiv Inc. jumped 61 cents for a 6.16% gain to end the day at $10.51 a share.

Others with operations in Oklahoma.

ConocoPhillips (COP) up 0.93 at 37.64 – change 2.53%

 

EOG Resources (EOG) up 2.09 at 48.46 – change 4.50%

ExxonMobil (XOM) up 1.22 at 43.47 – change 2.88%

Kinder Morgan (KMI) up 0.47 at 14.50 – change 3.34%

Marathon Oil Corp. (MRO) up 0.26 at 5.78 – change 4.71%

National Oilwell Varco (NOV) up 0.16 at 11.75 – change 1.38%

Noble Energy (NBL) up 0.21 at 10.18 – change 2.10%

Occidental Petroleum (OXY) up 0.49 at 15.74 – change 3.21%

ONEOK (OKE) up 1.07 at 29.19 – change 3.80%

Phillips 66 (PSX) up 0.73 at 61.85 – change 1.19%

Valero (VLO) down 0.89 at 53.02 – change 1.66%


CLOSING TOP UTILITY STOCKS

American Electric Power (AEP) down 0.23 at 85.54 – change 0.27%