Oil Futures Mixed in Morning Trade

WASHINGTON, D.C. (DTN) -- Nearest delivered oil futures on the New York Mercantile Exchange and the Brent contract on the Intercontinental Exchange moved mixed in midmorning trade, with West Texas Intermediate and Brent easing from Tuesday's four-month highs after hitting resistance, as the market now awaits official figures from Energy Information Administration on U.S. crude oil stockpiles due for release Wednesday morning.

Nymex WTI April contract was down $0.08 near $58.95 barrel (bbl) ahead of contract expiration this afternoon, while the May contract traded at $0.21 premium to April delivery. ICE Brent May contract traded flat at $67.62 with Brent crude remaining in a short-term uptrend. ULSD April futures lost 0.46 cents to trade at $1.9858 and RBOB futures gained 0.23 cents to trade at $1.8954, easing from a $1.9018 five-month high on the spot continuation chart.

Wednesday morning, traders' focus also included ongoing U.S.-China trade negotiations after a series of conflicting reports earlier this week. According to Bloomberg News, U.S. officials expressed their concern that China is pushing back against U.S. demands, as Chinese negotiators have yet to receive assurances that tariffs imposed on Chinese goods would be lifted once the deal is reached. The Wall Street Journal is reporting high-level U.S.-China trade talks will resume next week, as U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are scheduled to travel to Beijing in a final push for trade agreement.

The U.S. Federal Reserve is set to announce its decision on interest rates later Wednesday afternoon following its two-day monetary policy meeting. The Federal Open Market Committee is expected to keep interest rates at the current 2.5%, while also decreasing expectations for U.S. gross domestic product in 2019. In December, the Fed projected a 2.3% growth rate for 2019, slowing from 3% in 2018.

WTI futures received some support from an unexpected drop in domestic commercial crude oil and refined product inventories during the week ended March 15 reported by American Petroleum Institute on Tuesday. API data shows supplies fell 2.133 million bbl during the week profiled, while market expectations were mixed between a build and draw, with the consensus estimating a 1.0 million bbl crude supply increase.

Oil futures continue to draw support from extended supply cuts from the Organization of the Petroleum Exporting Countries led by Saudi Arabia and 10 non-OPEC allies led by Russia, along with U.S. sanctions against oil exporters Iran and Venezuela. Oil prices have gained almost 30% since the start of the year, pointing to a tightening global oil market in the second quarter.

Earlier this week, the Joint Ministerial Monitoring Committee overseeing the OPEC+ agreement said it achieved 90% compliance with 1.2 million bpd in production cuts in February compared with 83% in January. OPEC+ will next meet June 25-26 to discuss the possible extension of the six-month agreement beyond June 30 after canceling an April meeting.

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

(CZ)