Futures Movers: Oil prices shake off mild pullback

Posted By: EN Todayon: September 27, 2023In: General Energy News, Oil & Gas News

Oil futures rose Wednesday, brushing off broader weakness across financial markets, as investors remain focused on tight crude supplies.

Price action

West Texas Intermediate crude for November delivery
CL.1,
+1.79%

CL00,
+1.79%

CLX23,
+1.79%
rose $1.26, or 1.4%, to $91.65 a barrel on the New York Mercantile Exchange.
November Brent crude
BRNX23,
+1.38%,
the global benchmark, was up 96 cents, or 1%, at $94.92 a barrel on ICE Futures Europe.

Market drivers

Oil rebounded from early weakness Tuesday to finish higher, despite pressure on other assets perceived as risky that saw the Dow Jones Industrial Average
DJIA
post its biggest one-day fall since March as it and the S&P 500
SPX
posted their lowest finish since early June.

Crude also remained firm despite further strength in the U.S. currency, with the ICE U.S. Dollar Index
DXY
hitting a 10-month high on Tuesday.

“The price action suggests that tightening fundamentals are largely driving the market at the moment. Although clearly, external influences will be providing some headwinds to the oil market,” said Warren Patterson and Ewa Manthey, commodity strategists at ING, in a note.

The American Petroleum Institute late Tuesday said U.S. crude inventories rose by 1.59 million barrels last week, according to a source citing the data, while gasoline stocks fell 70,000 barrels and distillate inventories dropped by 1.7 million barrels.

Of note, crude inventories at Cushing, Oklahoma, the Nymex delivery hub, fell by 828,000 barrels.

Tightening supplies at Cushing have contributed to so-called backwardation, with the front-month WTI contract trading at a premium of around $1.90 to the December contract
CLZ23,
+1.43%.

The Energy Information Administration’s more closely followed inventory data is set for release Wednesday morning.

Analysts surveyed by S&P Global Commodity Insights, on average, expect U.S. crude stocks to show a fall of 2.2 million barrels, with gasoline down 800,000 barrels and distillate stocks down 1.1 million barrels. The analysts expect Cushing to see a 1 million barrel draw in crude supplies.