Oil Futures Mixed

NEW YORK (DTN) -- New York Mercantile Exchange oil futures were mixed at the start of regular trade Thursday morning, with West Texas Intermediate crude pressured to a two-week low as data showing U.S. crude stocks rose to a fresh record high renewed concerns about a glut of supply.

The downside was limited by a weakening dollar, with the greenback sliding to a better than five-month low versus peer currencies on the back of dovish comments made during a speech Tuesday by Federal Reserve Chair Janet Yellen.

Today's the last day for March trade and the end of the first quarter, with NYMEX April products and May Brent futures on the IntercontinentalExchange all set to expire that the close of regular trade this afternoon.

"Crude oil prices are going out like a lamb this March as hedge funds look to book profits from their largest net long position since May, 2015," said analyst Phil Flynn at Price Futures Group. "Hedge funds like to book profits at the end of the month because they get paid on the profits they made during the month, not to mention the first quarter of 2016, which ends today."

At 9:00 AM ET, NYMEX May WTI crude oil futures were down 13 cents at $38.19 per barrel (bbl), off a two-week spot low of $37.57. ICE May Brent nudged up 31 cents to $39.57 bbl, while the June Brent contract increased 15 cents to $40.20 bbl

NYMEX April ULSD futures held on to gains, up 1.79 cents at $1.1776 gallon, with May contract up 0.87 cent at $1.1808. April RBOB futures were down 1.71 cents to $1.4193 gallon, off a two-week low of $1.4100, with May contract down 2.01 cents to 41.4460.

On the economic front, the Labor Department this morning reported weekly jobless claims rose 11,000 to 276,000, more than the 265,000 expected by the market, a sign layoffs may be picking up amid a mixed economic outlook, said an analyst.

The market now looks forward to the release of March U.S. payroll report on Friday that's expected to show 195,000 new jobs were added to the economy this month. Private payroll firm ADP on Wednesday estimated that the economy gained 200,000 new jobs in March.

On Wednesday, the Energy Information Administration reported U.S. commercial crude oil inventories gained 2.3 million bbl to a 534.8 million bbl new weekly high in the week-ended March 25, with inventory 13.4% higher than year prior levels. This was the seventh straight weekly build for crude inventories, and it came despite a 2.0% spike in refinery runs to a high of 90.4%.

The EIA also detailed a 2.5 million bbl stock draw for gasoline and a 1.1 million bbl stock decline for distillates. Demand data was mixed, with refinery crude inputs up 414,000 bpd while implied gasoline demand fell 259,000 bpd and implied distillate demand surged 475,000 bpd for the week.

Flynn said, "Crude prices have risen about 50% since mid-February and it seems the funds used yesterday's initial spike after the EIA crude supply number came in short of expectations to take some profits off the table. Still the short term market is worried about over supply because oil supply crept to a record high."

Michael Cohen, head of energy commodities research at Barclays Capital this morning projected a 20% to 30% cut in capital expenditures by oil companies for the years 2015 and 2016, moves that bodes for a rally down the road since the production increase rate would be curtailed.

However, in the short term the market is likely to remain depressed because higher production by several members of the Organization of Petroleum Exporting Countries is offsetting temporary outages in Nigeria and Libya. OPEC's output rose to 32.47 million bpd in March, up from 32.37 million bpd in February, Reuters reported on Wednesday.

OPEC and non-OPEC have scheduled an April 17 summit in Qatar to discuss freezing production at January levels, but critics of a potential deal note that production by the Saudis, Iraq and Russia were at or near record high output rates in January.

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