Oil Futures End Lower Monday

NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled lower Monday afternoon, with West Texas Intermediate futures in bear-market territory after losing 22% of its value from a June 9 high of $51.67 per barrel (bbl), falling on concern over building supply, U.S. dollar strength, and the prospect of a reduction in demand due to economic weakness.

"We see the mood is negative and there's not a lot of support for the market now," said analyst Phil Flynn at Price Futures Group. "We came back after the weekend and saw what we expected didn't happen because Libya is now exporting more oil and OPEC data show output at a record high while seasonal demand is weakening."

Crude production by the Organization of Petroleum Exporting Countries climbed to the highest level in recent memory in July to 33.41 million bpd, a survey by Reuters showed on Friday. Last month Iraq shipped more crude oil and Nigeria boosted its exports despite militant attacks on oil facilities. Saudi Arabia pumped near a record high partly to meet seasonally higher domestic demand.

NYMEX September WTI futures settled $1.54 lower and just above the important psychological level of $40 at $40.06 bbl, after paring a loss to a $39.82 3-1/2 month low on the spot continuation chart. On the IntercontinentalExchange, the October Brent crude contract settled down $1.39 lower at $42.14 bbl.

In products trade, NYMEX September ULSD futures tumbled 4.96 cents to a $1.2579 gallon settlement, edging off a 3-1/2 month spot low of $1.2505. The NYMEX September RBOB futures contract settled down 1.58 cents at $1.3036 gallon.

On Wall Street, equities were mixed this afternoon while the dollar bounced off Friday's three-week low. The dollar index rallied to a 4-1/2 month high on July 25.

Oil traders have a host of data points and monetary issues to consider this week, with Japan's Prime Minister on Tuesday expected to announce another economic stimulus plan. On Thursday, the Bank of England is expected to announce either a cut in interest rates or quantitative easing in an effort to minimize Britain's decision to leave the European Union. On Friday, U.S. employment data for July will be released by the Labor Department.

Analysts expect oil supply data for the week-ended Friday, July 29, to show across the board drawdowns. The American Petroleum Institute will release its weekly data Tuesday afternoon and the Energy Information Administration their report Wednesday morning.

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