NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled higher Friday as comments by Russia and declining crude oil supply offset President Donald Trump's decision to waive sanctions against Iran, one of the 14 countries that make up the Organization of the Petroleum Exporting Countries.
Oil futures were off to a weak start early Friday as traders booked profits during overnight trade following a rally early Thursday. However, oil prices reversed higher midsession after Russia's oil minister Alexander Novak said global crude supplies were not balanced yet, suggesting OPEC and non-OPEC producers including Russia would not wind down their agreement cutting production until the end of 2018 as per their two-year agreement.
"OPEC is sticking to their production cuts, U.S. crude oil inventories are falling and we have increasing demand due to better than expected economic growth," said Andy Lipow, president of Lipow Oil Associates.
U.S. crude oil inventories were drawn down last week by 4.9 million bbl to a 2-1/2 year low of 419.5 million bbl, according to the latest data from the Energy Information Administration. The nation's crude supply has dropped 39.5 million bbl or 9.4% since Nov. 10 amid strong refinery runs and crude inputs.
EIA's monthly report released on Jan. 9 raised its global oil demand forecast for 2018, citing strong U.S. demand. The agency said global oil demand would increase by 1.72 million bpd to 100.11 million bpd this year, up from growth rate of 1.44 million bpd to 98.39 million bpd in 2017.
NYMEX February West Texas Intermediate futures settled 50cts higher at $63.30 bbl, after trading Thursday at a $64.77 three-year intraday high on the spot continuous chart. The WTI contract rallied $2.86 this week. March Brent crude futures on the ICE platform settled 61cts higher at $69.87 bbl, near Thursday's better than three-year spot intraday high of $70.05 and up $2.25 on the week.
NYMEX February ULSD futures edged 0.83cts higher at $2.0850 gallon at settlement, up 2.63cts on the week. February RBOB futures settled up 1.25cts at $1.8495 gallon, and 6.37cts higher on the week.
This afternoon, Trump said he would grant sanctions relief to Tehran for the last time and gave European allies 120 days to fix the Iran nuclear deal that he thinks is flawed. Trump's decision has implications for Iran's oil supply.
Iran reported oil production of 3.8 million bpd in November, according to OPEC's most recent Monthly Oil Market Report released in December.
George Orwel can be reached at email@example.com
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