Oil Ends Shallowly Mixed Monday

NEW YORK (DTN) -- New York Mercantile Exchange West Texas Intermediate crude futures settled at its lowest point on the spot continuation chart since April 2 and just above $50.00 bbl ahead of the August contract’s expiration Tuesday afternoon, while oil products futures ended shallowly mixed. NYMEX oil futures were pressured by a strong dollar and ongoing supply glut exacerbated by the possibility of more oil on the market following last week’s Iranian nuclear accord, with RBOB futures eking out a modest gain on strong seasonal demand.

“Commodities were generally under pressure,” said analyst Phil Flynn at Price Futures Group in Chicago. “Oil is weaker because people are still concerned about [a slowdown in] China and the collapse of gold is playing into those fears. But the main thing weighing down oil is the strong dollar and the expiration of the August WTI contract.”

NYMEX August WTI futures slipped below $50 bbl for the first time since early April with a $49.85 trade before settling down 74 cents at $50.15 bbl. The September WTI contract settled down 77 cents at $50.44 bbl.

The ICE September Brent contract eased 45cts to $56.65 bbl, moving off a two-week spot low at $56.33. The September Brent contract held a $6.21 bbl premium over September WTI.

In products trade, the NYMEX August ULSD contract eased 0.57 cents to settle at $1.6584 gallon, paring a decline to a six-month spot low at $1.6422. The NYMEX August RBOB contract was little changed, up 0.17 cents to $1.9303 gallon at settlement, trimming an advance to a $1.9448 gallon one-week high.

On Wall Street, U.S. equities were higher while the U.S. dollar climbed to a three-month high versus a basket of six major currencies on expectation the Federal Reserve would hike the federal funds rate later this year while risks related to the Greek debt crisis ease.

Fed Chair Janet Yellen told Congress last week the federal funds rate would increase later this year as the U.S. economy continues to improve, with data showing inflation rising and housing starts soaring, further supporting the dollar.

Concerns over Greece are easing, while Greek banks reopened Monday for the first time in three weeks following a mandatory shutdown. Capital controls remain, however.

The United Nations Security Council Monday approved the nuclear deal reached July 14 with Iran and six world powers, but delayed implementation until after a vote by the U.S. Congress in October.

Iran is expected to boost its crude oil exports by as much as 1.0 million bpd to 2.4 million bpd by next year once the deal is implemented and sanctions on the country’s crude oil exports are lifted. Iranian officials Monday said they could boost oil production to 4.0 million bpd in six to seven months from 2.8 million bpd in June and 3.7 million bpd in 2011 before the sanctions were imposed.

Domestically, analysts estimate U.S. crude oil stocks fell 3.2 million bbl during the week ended July 17, with gasoline stocks seen rising 750,000 bbl and distillate stocks expected to have increased by about 2.0 million bbl.

George Orwel can be reached at george.orwel@telventdtn.com