NEW YORK (DTN) -- New York Mercantile Exchange oil futures reversed higher Monday morning after seesawing on either side of Friday's settlements overnight, with traders positioning ahead of a much anticipated meeting this weekend by major oil producers to freeze output at January levels.
A weekly decline in U.S. crude supply and a weakening dollar also supported the oil futures complex, with NYMEX West Texas Intermediate and ICE Brent futures both testing resistance.
At 9:00 AM ET, NYMEX May WTI crude futures rose 36cts to $40.08 bbl while June Brent crude futures on the IntercontinentalExchange advanced 32cts to $42.26 bbl. In products trade, NYMEX May ULSD futures inched up 0.75cts to $1.2079 gallon while May RBOB futures edged up 1.28cts to $1.4765 gallon.
The Organization of the Petroleum Exporting Countries and non-OPEC producers are set to meet on Sunday (4/17) in Doha to discuss a plan designed earlier this year by Russia and Saudi Arabia to freeze oil production at January levels. Some critics note a freeze is not a cut and production by the Saudis, Iraq and Russia were at or near record high output rates in January. But bullish traders don't seem to mind, betting that oil prices will move higher.
Oil futures rallied last week after the Energy Information Administration's data showed a 4.9 million bbl draw from U.S. crude stockpiles during the week-ended April 1. It was the first draw in eight weeks, but refined oil products data were bearish, showing weekly supply builds.
Baker Hughes, Inc. said Friday the number of active oil rigs in the United States fell 8 last week to 354, the lowest level since Nov. 6, 2009 when the count was 332. Overseas, some North Sea oilfields are on maintenance, reducing Brent supply.
"Supply outages and adjustments to output in response to lower oil prices are helping to tighten market balances," said Barclays Capital. "However, the demand growth is softer in first half of 2016 at 1.0 million bpd relative to first half 2015 at 1.8 million bpd."
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