ANS rangebound $60s

Surprise U.S. oil inventory build and strong dollar trim recent gains

Steve Sutherlin

for Petroleum News

Alaska North Slope crude lost ground Nov. 4 but remained in the upper $60s, dropping 47 cents to close at $66.18 per barrel. West Texas Intermediate dropped 49 cents to close at $60.56, and Brent dropped 45 cents to close at $64.44.

The dollar gained against other currencies as the U.S. Federal Reserve stuck to a hawkish script regarding additional benchmark interest rate reductions in 2025, following a rate drop in October. A U.S. interest rate cut normally stimulates demand.

A stronger greenback renders dollar-denominated oil more expensive for holders of other currencies, squelching demand.

Oil futures continued lower Nov. 5 on a surprise inventory build in U.S. commercial crude supplies -- excluding Strategic Petroleum Reserve levels. WTI crude fell 96 cents, or 1.59%, lower to close at $59.60 -- a two-week low -- on the New York Mercantile Exchange. Brent futures closed 92 cents -- or 1.43% lower to $63.52. ANS for Nov. 5 had not yet been released by the Alaska Dept. of Revenue at Petroleum News press time.

U.S. commercial crude oil inventories for Oct. 31 increased by 5.2 million barrels from the previous week to 421.2 million barrels -- 4% below the five-year average for the time of year, the U.S. Energy Information Administration said in its weekly petroleum status report released Nov. 5.

A Wall Street Journal analyst survey predicted on the average a 100,000-barrel decline.

Total motor gasoline inventories diverged over the week with a bullish drawdown of 4.7 million barrels to 206.0 million barrels -- 5% below the five-year average for the time of year, according to EIA data.

Distillate fuel inventories decreased by 0.6 million barrels for the period to 111.5 million barrels -- 9% below the five-year average for the season.

The WSJ poll forecast gasoline stocks to fall by 1.3 million barrels, while calling for distillate inventories to fall by 1.6 million barrels.

Manufacturing activity reports stoked additional demand worries Nov. 5 as China reported lower factory activity for a seventh month in October, and U.S. October manufacturing contracted for an eighth straight month.

On the supply side, oil prices have garnered support on recent reports that the U.S. military may soon launch military strikes on Venezuela -- the world's 12th largest oil producer.

Reduced crude exports from Russia are also supportive.

Ukraine has targeted some 28 Russian refineries over the past three months, exacerbating a local fuel crunch and sapping export capabilities, according to a Nov. 5 barchart report. Drone and missile attacks on Russian refineries and oil export terminals cut Russia's total seaborne fuel shipments to 1.88 million barrels per day in the first ten days of October -- the lowest average in over 3.25 years -- while clobbering 13% to 20% of Russia's refining capacity by end month, curbing production by some 1.1 million bpd.

Trading placid despite OPEC+ production add

On Nov. 2, the Organization of the Petroleum Exporting Countries and its allies announced a production increase of 137,000 bpd for December, but the increase was expected, and OPEC+ will pause the production hikes in Q1 2026 citing an emerging global oil surplus.

The cartel seeks to restore all a special 2.2 million bpd production cut in 2024; it still has 1.2 million bpd of production left to restore.

ANS popped 47 cents Oct. 31 to close at $66.62, as WTI popped 41 cents to close at $60.98, and Brent ticked up 7 cents to close at $65.07.

ANS lost a penny Oct. 30 to close at $66.16, while WTI tacked on 9 cents to close at $60.57, and Brent added 8 cents to close at $65.

On Oct. 29 ANS gained 27 cents to close at $66.17, WTI jumped 33 cents to close at $60.48, and Brent leapt 52 cents to close at $64.92.

As of Nov. 4, ANS traded at a $5.62 premium over WTI, and at a $1.74 premium over Brent.

ANS rose 28 cents from its Oct. 28 close of $65.90 to close at $66.18 Nov. 4.