Oil Ends Lower Friday

NEW YORK (DTN) -- New York Mercantile Exchange oil futures ended lower Friday afternoon after traders booked profits on news Hurricane Matthew spared the southeast coast of Florida from major damage that would have tightened fuel supply.

An increase in the weekly U.S. oil rig count and reports Russia was downplaying the prospect of a deal with the Organization of Petroleum Exporting Countries to further cut production when they meet this weekend added to the bearish sentiment.

"The storm didn't do as much damage as originally feared, and we hope they will reopen ports and resume imports soon," said analyst Phil Flynn at Price Futures. "Most significant, the market reacted to comments from Russia that this meeting in Turkey is for consultations only and they won't sign any deal by taking profits."

NYMEX November WTI crude futures fell 63cts to $49.81 bbl, reversing off a four-month spot high of $50.74 but ended the week up $1.57. ICE November Brent futures settled down 58cts at $51.93 bbl, reversing off a fresh four-month spot high of $52.84, while spot value is up $2.87 for the week.

In products trade, NYMEX November ULSD futures slid 1.65cts to $1.5793 gallon at settlement, having reversed off a $1.6058 fresh one-year spot high, and posted a weekly gain on the spot continuation chart of 5.14cts. NYMEX November RBOB futures retreated 1.60cts to a $1.4818 gallon settlement, with nearest delivered RBOB futures down 0.56cts for the week.

Since OPEC agreed to cut its overall output in Algiers last week, it has been working on details so the deal can be formalized at their Nov. 30 biannual meeting in Vienna. But they also want non-OPEC producers to join the deal. On Thursday, OPEC said it would meet with Russia for informal talks in Istanbul on Oct. 9-13 to seek cooperation with the world's largest provider in reducing global oil supply.

Analysts are not convinced OPEC's pledge last week to cut output for the first time since 2008 would result in higher prices, as doubts run high over the feasibility of the decision, a survey by Reuters showed on Friday.

On domestic supply, Baker Hughes Inc. reported today that the number of active oil rigs in the United States rose by three to 428 this week, an eight-month high, while down 177 versus a year ago.

On Wednesday, the Energy Information Administration reported crude oil stocks fell 3.0 million bbl to 499.7 million bbl in the week-ended Sept. 30, falling below 500 million bbl for the first time since January.

EIA said starting with this week's data that will be reported on Oct. 13, it will no longer include crude stored in tanks on lease lands in the total commercial crude oil inventory data series. The change will reduce total crude stocks by roughly 31 million bbl.

Also weighing on market sentiment, the U.S. dollar rallied to a two-month high today before reversing down, and the payroll report for September issued this morning showed a less-than-expected 156,000 jobs were added to the economy. Expectation the Federal Reserve will raise the federal funds rate in December is growing.

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