Oil futures declined, with U.S. and global benchmark prices logging their lowest finish in about two months, as downbeat economic data weighed on prospects for energy demand, and domestic crude stockpiles registered a third straight weekly climb.
The U.S. added a modest 135,000 private-sector jobs in September, ADP said Wednesday, less than the forecast gain of 152,000. That followed data from the Institute for Supply Management a day earlier that showed its manufacturing index fell to 47.8 last month from 49.1, marking the lowest level since June 2009. A reading below 50 reflects deteriorating conditions.
“The ADP was less than inspiring and not enough for oil traders to shake off their slowing economy funk,” said Phil Flynn, senior market analyst at Price Futures Group. The “surprise plunge” in the ISM manufacturers index had already “raised concerns about a major global economic slowdown and a bad start to the fourth quarter of the year.”
West Texas Intermediate crude for November delivery
CLX19, -1.94%
fell 98 cents, or 1.8%, to settle at $52.64 a barrel on the New York Mercantile Exchange. December Brent
BRNZ19, -0.17%,
the global benchmark, declined by $1.20, or 2%, to $57.69 a barrel on ICE Futures Europe. Both crude benchmarks marked the lowest front-month contract settlements since Aug. 8, according to FactSet data.
The Energy Information Administration on Wednesday reported that U.S. crude supplies rose for a third week in a row, by 3.1 million barrels for the week ended Sept. 27.
They were forecast to climb by 1.3 million barrels, according to analysts polled by S&P Global Platts. The American Petroleum Institute on Tuesday, however, reported a drop of 5.9 million barrels. Discrepancies between the reports from the EIA, a government agency, and the API, a trade group, aren’t unusual, and are often attributed to the different ways the data are reported to the two groups.
The EIA report “showed refiners slowed output, the first time since mid-August, but the build was driven as demand eased,” said Edward Moya, senior market analyst at Oanda. U.S. crude refinery inputs averaged 16 million barrels a day last week, down 496,000 barrels a day from the previous week’s average, and refineries operated at 86.4% of operable capacity, down from 89.8% a week earlier, according to the EIA.
The EIA data showed that gasoline inventories fell by 200,000 barrels, while distillate stockpiles declined by 2.4 million barrels last week. The S&P Global Platts survey revealed expectations for a supply climb of 308,000 barrels for gasoline and a decline of 2.2 million barrels for distillates, which include heating oil.
While the market is taking the EIA supply data “as a negative because of weak economic sentiment, supplies of distillates are 8% below average—and is a problem considering the new IMO rules,” said Flynn, referring to the International Maritime Organization rules that kick in on Jan. 1, 2020, requiring less sulfur content in marine fuel.
Back on Nymex, November gasoline
RBX19, -1.91%
lost 2.8 cents, or 1.8%, to $1.5455 a gallon, while November heating oil
HOX19, -1.50%
fell 2.6 cents, or 1.3%, at $1.873 a gallon.
November natural gas
NGX19, -1.14%
ended 3.6 cents, or 1.6%, lower at $2.247 per million British thermal units. On average, analysts expect the EIA’s report Thursday to show a 109 billion-cubic-foot weekly increase in U.S. natural-gas stockpiles, according to an S&P Global Platts poll.
