Oil Futures Lower on OPEC Data

NEW YORK (DTN) -- New York Mercantile Exchange oil futures pulled back on Monday after last week's gains, pressured by a strengthening dollar and dimming prospect the Organization of Petroleum Exporting Countries would rein in production any time soon following bearish comments from Iran.

OPEC also issued a new report that didn't help, analysts said, leaving global demand expectations for 2016 unchanged from February estimates while raising 2015 supply estimates for non-OPEC producers. Adding to the downside were technical pressure and growing sentiment among traders that the market has pushed values too far ahead of short-term supply and demand fundamentals that remain weak.

At settlement, NYMEX April West Texas Intermediate crude futures fell $1.32 to $37.18 per barrel (bbl), off a three-session low of $36.68. ICE May Brent crude futures trade fell 86 cents to $39.53 bbl, off a one-week low of $38.82.

In products trade, NYMEX April ULSD futures tumbled 2.15 cents to $1.1965 gallon at settlement, off a one-week low of $1.1715. The April RBOB futures contract fell 2.17 cents to $1.4226 gallon, off a three-session low of $1.4040.

"We got off to a slow start this morning and we couldn't get over it because people are hesitant to buy before the Fed meeting, which is why the dollar is up," said analyst Phil Flynn at Price Futures. "The OPEC report this morning gave mixed signals, so it didn't help inspire buying, but we have a lot of data ahead this week."

On Wall Street, major stock indices were mixed this afternoon, with the dollar strengthening for a second straight session ahead of retail sales data due out Tuesday and this week's two-day policy meeting by Federal Open Market Committee.

The market doubts the Fed will hike the federal funds rate this week, which sits at 0.25% after the first increase in nearly a decade in December. Investors will scrutinize comments by Fed Chair Janet Yellen during her news conference Wednesday afternoon following the two-day FOMC meeting.

In morning trading, OPEC released its Monthly Oil Market Report for March that raised year-on-year supply growth in 2015 by non-OPEC by 100,000 barrels per day (bpd) to 57.09 million bpd for an annualized growth rate of 1.42 million bpd. The report expects non-OPEC supply for 2016 to decline by 700,000 bpd, unchanged from the forecast published last month.

The monthly report maintained its outlook for annual global oil demand growth for this year at 1.25 million bpd for a 2016 consumption rate of 94.23 million bpd.

The market was disappointed by comments from Iran's oil minister Bijan Namdar Zaganeh who said Sunday that Tehran wouldn't join a crude oil output freeze plan designed last month by Russia and Saudi Arabia until its own output recovers to 4.0 million bpd. Zanganeh's comment dashed any hope of an agreement that has boosted oil prices in recent weeks, analysts said.

Other OPEC members said OPEC and non-OPEC could still hold a meeting either in Doha or Russia in April. However, Flynn said the conflicting statements were only causing confusion and uncertainty.

Early estimates for the change in U.S. crude and oil products for the week-ended March 11 call for a 2.0 to 4.0 million bbl build in commercial crude supply to have occurred. Analysts also expect gasoline stocks to have fallen by 4.0 million bbl while distillate stocks are forecast to have been drawn down by 2.0 million bbl.

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