Oil Up in Early Trade Monday

NEW YORK (DTN) -- New York Mercantile Exchange oil futures advanced at the start of regular trade Monday after Russian President Vladimir Putin said this morning that Russia is ready to freeze or cut its oil production, joining the Organization of Petroleum Exporting Countries that hopes to finalize its own agreement to reduce output at the formal meeting in Vienna.

The news from Moscow came as Russian Energy Minister Alexander Novak met with OPEC in Turkey to discuss how to stabilize the market. OPEC and non-OPEC oil producers have been meeting in Istanbul informally since Sunday to discuss output policy.

OPEC agreed on Sept. 28 to limit its oil production rate to 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 roughly 33.237 million bpd. That pact has supported the oil market for the past week and a half.

Specifics about how to implement the agreed OPEC cuts including output quotas for each member country is expected to be released on Nov. 30.

At 9:00 AM ET, NYMEX November WTI crude futures were 65cts higher at $50.46 bbl while ICE November Brent futures added 83cts to $52.76 bbl. The WTI and Brent contracts are near four-month highs.

In products trade, NYMEX November ULSD futures contract were 1.91cts higher at $1.5984 gallon and near a $1.6058 fresh one-year spot high posted on Friday. NYMEX November RBOB futures were 0.65cts higher at $1.4883 gallon.

Domestically, the Energy Information Administration reported last week that 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 2016.

EIA said starting with last 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 and could create panic buying in crude oil futures by those unaware of the statistical change by the EIA.

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