MW: Crude drops after Obama win; supply data looms
By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — Crude-oil futures fell on Wednesday, tracking losses for stock futures after initial relief over news of a second term for U.S. President Barack Obama gave way to worries about the fiscal cliff.
Oil for December delivery CLZ2 -1.18% fell $1.21, or 1.4%, to $87.50 a barrel on the New York Mercantile Exchange.
The contract had rallied 3.6% on Tuesday.
President Obama won Tuesday a close race against Republican challenger Mitt Romney. Read: Dollar loses safe-haven bid as Obama wins
“His reelection should be viewed as rather bullish for oil, as in addition to a tougher stance on energy regulations and licensing in the U.S., he is friendlier toward expansionary monetary policies than his opponent in the presidential race, [Mitt] Romney,” said analysts at JBC Energy in emailed comments.
U.S. stock futures declined on Wednesday morning, while the dollar strengthened, as investors started worrying about the fiscal cliff — a combination of tax hikes and spending cuts that will come into effect on Jan. 1 unless politicians reach a budget deal.
President Obama will have to work with a divided Congress after Republicans kept control of the House of Representatives, while Democrats retained control of the Senate.
Oil markets were also jittery ahead of supply data. The American Petroleum Institute reported Tuesday that crude-oil supplies rose 313,000 barrels for the week ended Oct. 19.
The Energy Information Administration will release its more closely watched data on Wednesday morning. Analysts from Platts expect the EIA data to show a 1.7- million-barrel rise in crude-oil supplies for last week. Read: API reports smaller-than-expected oil supply rise.
In a short-term outlook released Tuesday, the EIA said it expects total U.S. crude-oil production to average 6.3 million barrels a day in 2012, a rise of 0.7 million bbl/d from last year. Projected U.S. domestic crude-oil production will rise to 6.8 million bbl/d in 2013, the highest level since 1993. The EIA predicted the West Texas Intermediate oil price will average $88 a barrel in 2013.
The EIA also said working natural-gas inventories are at a record level.
Natural gas for December delivery NGZ12 -0.86% fell 2 cents, 0.6%, to $3.59 per million British thermal units. Heating oil for December delivery HOZ2 -0.77% fell 3 cents, or 1%, to $3.02 a gallon.
December gasoline RBZ2 -0.74% fell 4 cents, or 1.4%, to $2.66 a gallon after a sharp rise the previous day. Gasoline prices have been gaining on shortages on the East Coast due to damages caused by Hurricane Sandy. Philadelphia Energy Solutions returned two major refineries to full rates on Tuesday, with tankers readied to deliver to the East Coast, Bloomberg News reported Tuesday.
Barbara Kollmeyer is an editor for MarketWatch in Madrid.
