NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled mixed with an upside bias Thursday, with West Texas Intermediate crude settling at a five-week high and Brent crude on the IntercontinentalExchange at a three-week high on optimism the Organization of Petroleum Exporting Countries would iron out details in November that lead to a reduction in their oil production following informal discussions on Wednesday and implement the cuts.
"This action will help OPEC keep those shorts on the sidelines until November, when winter-related demand will return and the prospect of market balancing is in further focus," said Barclays Capital.
OPEC said it would target a production rate in a 32.5 million bpd to 33.0 million bpd range that would cut output between 235,000 bpd and 735,000 bpd from the cartel's August output rate of 33.237 million bpd. The August rate of production is based on secondary sources in OPEC's most recent monthly report.
OPEC postponed allocation of supply quotas for individual OPEC member nations until the November biannual summit in Vienna.
The producer group said its first attempt to reduce output since 2008 was driven by the need to rid the oil market of a supply glut that has depressed oil prices for the past two years. Their failure to provide details initially raised doubt about implementation, but crude futures regained upside momentum after investment bank Goldman Sachs said the OPEC decision would add as much as $10 bbl to oil prices.
"The deal was supportive in that the oil market is higher, but the question is whether it will it hold," said David Thompson, executive vice president at Powerhouse brokerage. "I am still skeptical that it will. Iraq's oil minister does not seem to be happy with the proposal. Volume is well off from yesterday."
NYMEX November WTI crude futures settled 78cts higher at $47.83 bbl, edging off a $48.32 five-week high on the spot continuation chart. ICE November Brent futures settled 55cts higher at $49.24 bbl, off a $49.81 three-week high.
NYMEX October ULSD futures surged 1.92cts to $1.5102 gallon at settlement, off a $1.5288 one-month spot high. The November ULSD contract rose 2.35cts to $1.5191. NYMEX October RBOB futures bucked the uptrend, easing 1.09cts to a $1.4668 gallon settlement after inside trade, while the November RBOB contract was up 0.36cts to $1.4421.
The NYMEX October product futures contracts expire Friday afternoon.
Domestically, the Energy Information Administration showed stocks of crude and distillate fuels declined by 1.9 million bbl each during the week-ended Sept. 23, and gasoline supply increased 2.0 million bbl.
The market now awaits weekly oil rigs data due out Friday from Baker Hughes Inc.
George Orwel can be reached at firstname.lastname@example.org
© Copyright 2016 DTN/The Progressive Farmer. All rights reserved.