CRANBURY, N.J. (DTN) -- New York Mercantile Exchange oil futures with nearest delivery settled lower, with the December RBOB and ULSD contracts reversing early gains to expire down during a session highlighted by end-of-month book squaring and positioning ahead of Friday’s meeting by the Organization of Petroleum Exporting Countries.
A stronger U.S. dollar and renewed focus on fundamental factors erased an early advance and pressed the contracts down on the session, and added to steep losses for November by West Texas Intermediate crude and ULSD futures. Exerting additional pressure, monthly data released this afternoon by the Energy Information Administration underscored the resilience of U.S. oil production despite low prices.
The EIA reported monthly data from September that detailed a modest 20,000 barrels per day decline in U.S. crude oil production from August to 9.326 million bpd. September’s production rate is down 259,000 bpd or 2.7% from the peak in April of 9.585 million bpd, less than many had anticipated earlier in the year amid the steep slide in crude prices.
U.S. crude oil inventory was last reported at 488.2 million bbl on Nov. 20, a seven-month high, with the previous high reached in April at 490.9 million barrel a record high.
“The surplus of crude oil has been reflected in relatively subdued trading,” said Alan Levine, chairman of Powerhouse, a Washington, D.C.-based brokerage, in a note Monday to clients.
Levine highlighted the geopolitical tension in the Middle East, noting in past years it would have triggered more volatility and sharply higher prices.
“Some observers suggest that recent tensions are actually providing a floor for prices and without them, values would be even lower,” said Levine.
NYMEX January WTI crude futures settled down 6 cents at $41.65 bbl, and erased $4.94 or 10.6% of its value in November. January Brent crude futures settled down 25 cents at $44.61 bbl, while $4.95 or 9.9% lower in value than Oct. 31.
In products, NYMEX December ULSD futures expired down 1.55 cents at $1.3369 gallon, and near a $1.3217 gallon 6-1/2 year low on the spot continuation chart, with the January contract settling down 2.39 cents at $1.3542 gallon. Nearest delivered ULSD futures lost 16.25 cents or 10.8% of its value in November amid an oversupplied market and forecasts for a warmer-than-usual winter.
NYMEX December RBOB futures expired 3.18 cents lower at $1.3587 gallon in an outside down day, sliding from a $1.4166 gallon three-week high, with the January contract down 2.98 cents at $1.3069 gallon. Nearest delivered RBOB futures are down 4.63 cents or 3.3% in November, with the decline muted by strong gasoline demand and refinery downtime.
Brian Milne can be reached at email@example.com
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