Oil Futures Shallowly Mixed

Oil Futures Shallowly Mixed

NEW YORK (DTN) -- New York Mercantile Exchange oil futures moved shallowly mixed Monday morning after being closed on Good Friday while the dollar reversed lower after trading to a near two-day high earlier in pre-market trade.

The oil complex was higher overnight, supported by data showing an increase in China's crude imports, reductions in Nigerian and Iraqi supply and growing optimism leading oil producers including Russia and Saudi Arabia would freeze their oil production at January levels when they meet next month in Qatar.

"China crude oil imports picked up strongly in February due to high refinery runs and lower domestic output," said Barclays Capital in a client note this morning.

At 9 a.m. ET, NYMEX May West Texas Intermediate crude oil futures were up 28cts at $39.74 bbl, off a two-day high at $40.14. The contract has since turned lower.

The May Brent futures contract traded on the IntercontinentalExchange was up 12cts to $40.56 bbl, and has since turned lower.

NYMEX April ULSD futures eased 0.44cts to $1.1935 gallon while the April RBOB futures contract rose 1.23cts to $1.4782 gallon, off a $1.4858 gallon two-day high.

On Wall Street, major U.S. equity indices opened higher while the U.S. dollar reversed lower after U.S. economic data released this morning was weaker than the market expected.

The dollar had surged to a near two-week high overnight following St. Louis Federal Reserve Bank President James Bullard's hawkish comments last week. He suggested a hike in the federal funds rate could come as early as April, a statement that contradicted the Fed's dovish posture after the March 15-16 Federal Open Market Committee meeting.

Looking ahead, Fed Chair Janet Yellen is scheduled to give a speech Tuesday and New York Fed President Bill Dudley will deliver a speech Thursday. On Friday, the March nonfarm payroll report and manufacturing index will be released by the Labor Department and the Institute for Supply Management, respectively

On supply, the Energy Information Administration on March 23 reported crude oil held in U.S. storage rose 9.4 million bbl to 532.5 million bbl in the week-ended March 18, the highest level for U.S. inventory since 1930.

For the week-ended March 25, analysts expect another build in crude stocks, a sizable decline in domestic gasoline inventories and a moderate increase in middle distillate stockpiles.

Overseas, the Organization of Petroleum Exporting Countries and non-OPEC are set to meet April 17 in Qatar to debate the issue. Several OPEC countries have agreed to participate in the production freeze, although Libya won't be attend next month's meeting and Iran has said it won't freeze its output until it reaches 4.0 million bpd.

Citing secondary sources, OPEC in its latest Monthly Oil Market Report showed Iranian crude production in January at 2.944 million bpd and at 3.132 million bpd in February.

Critics of the potential deal note however production by the Saudis, Iraq and Russia were at or near record high output rates in January, and the International Energy Agency last week said such an agreement would likely be meaningless.

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