Futures Movers: Oil prices fall on signs of rising crude inventories, stimulus uncertainty

Oil futures slipped Wednesday, undercut by industry data showing a rise in U.S. crude-oil inventories and a muddled outlook for another round of government spending by Congress in response to the COVID-19 pandemic after President Donald Trump late Tuesday pulled the plug on stimulus negotiations but later demanded action on piecemeal aid measures.

West Texas Intermediate crude for November delivery CL.1, -1.82% on the New York Mercantile Exchange fell 92 cents, or 2.3%, to $39.75 a barrel. December Brent crude BRN00, -1.59% dropped 81 cents, or 1.9%, to $41.84 a barrel on ICE Futures Europe.

Weakness in prices in Asian trading hours appeared to be tied largely to Trump’s decision Tuesday afternoon to announce he had pulled the plug on talks between his administration and congressional Democrats on another package of pandemic relief spending until after the election, a decision blamed for a sharp selloff in U.S. stocks in afternoon trade. A few hours later, Trump changed course, calling on Congress to send him individual relief measures, including $1,200 stimulus checks for consumers and aid for airlines and small businesses.

The partial turnabout was credited with lifting U.S. stock-index futures, but the price reaction in crude oil signals “the market isn’t buying it and we need to accept that immediate consumer relief in the U.S. will be hard to come by, at least until the election is over,” wrote analysts at JBC Energy, a Vienna-based consulting firm, in a note.

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Meanwhile, the American Petroleum Institute, an industry trade group, reported late Tuesday that U.S. crude supplies rose by 951,000 barrels for the week ended Oct. 2, according to sources. The API data also reportedly showed gasoline stockpiles down by 867,000 barrels, while distillate inventories fell by 1.03 million barrels.

More closely followed data from the Energy Information Administration will be released Wednesday morning. The EIA data are expected to show crude inventories down by 2 million barrels last week, according to analysts polled by S&P Global Platts. They also forecast supply declines of 800,000 barrels for gasoline and 2.9 million barrels in distillates.

Traders also continue to track Hurricane Delta, which made landfall in Mexico’s Yucatán Peninsula as a strong Category 2 storm Wednesday and is expected to strengthen back into a major storm as it returns to open water. The hurricane is seen on track to threaten the U.S. Gulf Coast later this week.

The Bureau of Safety and Environmental Enforcement estimated that 29.2% of Gulf oil production and nearly 8.6% of natural-gas output was shut-in as of Tuesday afternoon in anticipation of the storm.