Oil Futures End Mostly Higher Thursday

WASHINGTON (DTN) -- Oil futures on the New York Mercantile Exchange and the Brent contract on the Intercontinental Exchange moved mostly higher in market-on-close trade Thursday, with West Texas Intermediate settling the pivotal session flat. Markets were skeptical of aggressive cuts by the Organization of the Petroleum Exporting Countries and partners after Russia was granted exclusion for gas condensate production under new terms of the agreement set to be formalized Friday.

OPEC+ agreed to 500,000 barrels per day (bpd) of additional production cuts until the end of March 2020, 40% more than their current accord, and oil prices barely responded. Despite bullish news out of Vienna, markets now doubt the group will comply with new quotas, as some members, namely Iraq and Nigeria, struggled to achieve more modest levels of curbs.

Also weighing on markets, Russia's gas condensate is now excluded from the terms of production, leading some analysts to decry upcoming cheating that would allow Russian companies to directly complete with U.S. tight oil producers on the global market.

Russian gas condensate and U.S. shale oil are very similar in its gravity and components.

OPEC+ has been operating under a production agreement for over two years, ceding global market share as production outside the group has surged, mostly driven by gains in the United States. Russian oil executives have long complained over lost market share, and the new production agreement may give them an opportunity to recapture more of the global market.

The group still needs to finalize their agreement in writing on Friday, with markets now waiting for details and clarification on new quotas.

Looking forward, investors also await the release of November nonfarm employment report from U.S. Labor Department at 8:30 a.m. EST Friday. Market consensus calls for stronger payroll growth of 180,000 for last month versus a modest 128,000 increase in October, largely attributed to a strike-related decline in manufacturing.

Manufacturing payrolls, after falling 36,000 in October, are expected to rebound by 20,000. However, earlier this week, Institute of Supply Management reported U.S. manufacturing index declined again in November after contracting for three consecutive months, which might be a bearish sign for Friday's job report. Furthermore, private payroll provider ADP released a disappointing employment estimates on Wednesday, detailing only 67,000 new jobs were added last month, far below the expectations for a gain 156,000.

U.S. dollar dropped to a one-month low 97.360 in afternoon index trade Thursday, while U.S. equity indexes were up modestly in late trade.

Following back-and-forth trading, NYMEX January West Texas Intermediate futures settled unchanged at $58.43 per barrel (bbl) and ICE February Brent contract gained $0.39 to a $63.39-per-bbl settlement. NYMEX January ULSD futures added 1.01 cents to $1.9330 gallon and NYMEX January RBOB futures increased 1.69 cents to $1.6211 gallon.

Liubov Georges can be reached at liubov.georges@dtn.com

(CZ)

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