Crude Oil Futures Sputter after Inventories in Low Volume Week

December 21, 2016 5:48AM CST

Crude oil futures sputtered lower in Wednesday’s commodities futures trading session, weighed down by a rise in U.S. crude inventories as refineries boosted output, and crude oil imports rose by 1.1 million barrels a day from the previous week.

The February contract in crude oil futures hovered lower, last down .36 percent at 53.11 in mid-day commodities futures trading on Wednesday.

Crude Oil Inventories for the week ending December 17 climbed by 2.3 million barrels to a total of 485.4 million barrels, according to the U.S. Energy Information Administration. Analysts expected stockpiles to fall for a fifth consecutive week, by 2.5 million barrels.

The crude build was offset in part by a drop in stockpiles at the Cushing, Oklahoma delivery hub and declines in fuel stocks.

Crude oil futures have been reacting news of the murder of Turkish Ambassador Andrey Karlov, which raised concerns about geopolitical risks. Political unrest tends to cause investors to worry that oil supplies will be hurt, which can boost prices. Low volume ahead of the Christmas holiday in the U.S. is also contributing to volatility in the energy sector of commodities futures markets.

Crude oil, backed by expectations of OPEC and non-OPEC production cuts as well as economic reports that show signs the U.S. economy will continue to improve, is increasing demand expectations and the tightening of supply.

On Tuesday, the American Petroleum Institute that reported that U.S. crude oil supply fell by an unexpected 4.15 million barrels. The report also a showed a 1.55 million barrel drop in crude supply and a 1.55 million barrel drop in gasoline supply. This compared with analyst expectations for a 1.4 million-barrel gain.

The February contract in natural gas futures soared on Wednesday, up 6.61 percent at 3.515.

In other data of note to commodities futures markets, Existing Home Sales for November grew by 0.7 percent to an annual rate of 5.61 million units, according to the National Association of Realtors, a surprise rise. It was the highest sales pace since February 2007. Economists had forecast sales falling 1.0 percent to a 5.50 million-unit pace in November. They added that the surge was due to homebuyers’ desire to lock in lower interest rates in what some see is ahead of an increase in borrowing costs.

The Mortgage Bankers Association Mortgage Index for the same week reported mortgage applications increased 2.5 percent, compared to the 4 percent decline in the previous week.

Crude Oil Daily Chart

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