Oil Futures Mixed After Choppy Trade

NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled mixed with an upside bias Friday afternoon, steadying ahead of the weekend break after a volatile session in which traders reacted to several issues including mixed signals by the Organization of Petroleum Exporting Countries about freezing output and comments by Federal Reserve leaders that boosted sentiment on the nation's economic health but also raised the prospects for a hike in interest rates this year.

Also, a fresh report by Baker Hughes Inc. showed the number of active oil rigs unchanged at 406.

"Oil spiked when Janet Yellen talked up the economy, then fell when Stanley Fischer said a rate hike should come this year; oil prices rose again when a report said a Yemeni missile hit a Saudi oil facility, then pared gains when the Saudis denied that report and the dollar also got stronger," said analyst Phil Flynn at Prices Futures in Chicago. "I do believe the tropical storm in the Atlantic that's heading for Florida and possibly the Gulf Coast may also be supporting oil futures, causing some short covering although the threat is limited."

NYMEX October WTI crude futures settled 31 cents higher at $47.64 per barrel (bbl), and ended the week $0.88 lower. The October Brent crude oil futures contract on the IntercontinentalExchange closed 25 cents higher at $49.92 bbl and down $0.96 for the week.

NYMEX September ULSD futures eased 1.22 cents to $1.4972 gallon at settlement and options on the spot month contract expired at today's regular session close. The September futures contract posted a 2.24 cents loss on the week. September RBOB futures edged up 0.14 cent to $1.5128 gallon, and finished the week virtually unchanged.

On Wall Street, equities fell while the dollar rose after Federal Reserve Chair Janet Yellen appeared to be setting the stage for a pull back its stimulus from under the economy, saying the case for a hike in federal funds rates has strengthened in recent months, with unemployment and inflation nearing the targets set by the Fed.

Yellen gave an upbeat assessment of the economy and appeared to back up hawkish comments uttered earlier this week by several Fed officials who want a rate hike sooner rather than later. However, the most hawkish comments came from moments later from Fed Vice-Chair Stanley Fischer, who reinforced the message that the economy has strengthened, and added that Yellen's speech was consistent with expectations for an interest rate hike this year. The market is pricing in one rate hike in September or December.

Earlier, oil futures fell in premarket trade after Iranian and Saudi Arabian officials tempered expectations for a deal by OPEC to freeze or cut output at their informal meeting scheduled for Sept. 26-28 in Algeria.

On Thursday, oil futures rallied after Iran confirmed plans to attend next month's OPEC talks, but this morning Iranian Oil Minister Bijan Namdar Zanganeh said Tehran will help stabilize the market so long as fellow OPEC members recognize its right to regain lost market share. And Saudi energy minister Khalid al-Falih said in an interview with Reuters that the market is moving in the right direction already, and he doesn't believe any significant intervention in the oil market is necessary.

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