Oil Futures Settle Lower
Oil Futures Settle Lower
NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled lower Monday afternoon amid concerns about high U.S. crude oil production, with crude stockpiles at the Cushing hub in Oklahoma estimated to have increased more than expected during the week-ended March 9.
"Oil got to a weaker start this morning on light volume amid concern about Cushing supply rising and OPEC talk of an exit strategy," said analyst Phil Flynn at Price Futures.
Genscape, an information gathering company, reported storage at Cushing was 31 million bbl on Friday (3/9), 2.82 million bbl higher than the 28.18 million bbl shown by the Energy Information Administration for the week-ended March 2.
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Cushing supplies have dramatically fallen since November because the Keystone pipeline from Canada has been operating partially, and also due to demand for crude by Gulf Coast refineries. However, as refineries start their seasonal maintenance programs, runs are easing, said analysts.
In addition, the Energy Information Administration released its Drilling Productivity Report this afternoon, projecting that shale oil production from seven major U.S. oil plays is expected to climb 131,000 bpd in April to 6.954 million bpd. Oil output from the Permian Basin is expected to see the largest increase among the big shale plays, with an increase of 80,000 bpd to 3.156 million bpd.
Last week, EIA reported U.S. crude output rose by 86,000 bpd during the week ended Mar. 2 to a 10.369 million bpd record high, up 1.281 million bpd from a year earlier. U.S. crude production is expected to reach a 10.7 million bpd average this year and 11.3 million bpd next year, EIA's projects.
Analysts said higher U.S. output would offset 1.8 million in production cuts by the Organization of Petroleum Exporting Countries and their 10 non-OPEC allies.
The Wall Street Journal this morning reported Saudi Arabia and Iran are at loggerheads over whether to continue cutting output to boost crude prices to $70 bbl or keep prices at $60 bbl by continuing with restraints on output.
At settlement, NYMEX April WTI crude oil futures dropped 68cts to $61.36 bbl while ICE May Brent was down 54cts at $64.94 bbl. NYMEX April ULSD futures were 2.19cts lower at $1.8647 gallon while April RBOB futures dropped 1.03cts to $1.8940 gallon.
George Orwel can be reached at george.orwel@dtn.com
(BE)
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