CRANBURY, N.J. (DTN) -- Oil futures with nearest delivery traded on the New York Mercantile Exchange settled little changed Monday, with West Texas Intermediate inching up in the opening week session and oil products futures softening.
The fractional daily changes follow an extension to last week's rally overnight to fresh and new highs before buying interest slowed amid overbought market conditions. A modest 11-cent gain by WTI futures was also realized despite a selloff in the U.S. dollar index to a 2-1/2 week low, which reached a 13-1/2 year high in late November.
The dollar was seen pressured by overbought market conditions as well, while the fallout from a no vote in Italy's referendum for constitutional changes and subsequent resignation by Italian Prime Minister Matteo Renzi was contained.
NYMEX January WTI futures settled at $51.79 per barrel (bbl) after trading at a $52.42 16-1/2 month high on the spot continuous chart, and February Brent crude on the IntercontinentalExchange settled up 48 cents at $54.94 bbl, edging off a $55.33 bbl 16-1/2 month spot high.
NYMEX January ULSD futures reversed a rally to a $1.6774 gallon 15-month high on the spot continuous chart to end down a fractional 0.1 cent at $1.6571, and January RBOB futures dipped 0.16 cent with a $1.5575 gallon settlement, erasing an advance to a fresh one-month spot high of $1.5789 gallon.
The market was lent early support from a meeting planned for Saturday, Dec. 10, between the Organization of the Petroleum Exporting Countries and 14 invited non-OPEC producers which follows OPEC's Nov. 30 agreement to cut production 1.2 million barrels per day (bpd) to 32.5 million bpd beginning Jan. 1, 2017.
During its Nov. 30 meeting, OPEC said it expected non-OPEC producers to cut 600,000 bpd, with Russia pledging a 300,000 bpd reduction in its production. OPEC hopes Saturday's meeting will match its expectations.
Market watchers are skeptical that non-OPEC producers would agree to also cut their supply, especially considering oil prices have rallied with OPEC's decision to cut output. This latest dynamic in the OPEC action, whom last cut production eights year ago, adds to the market scrutiny over the OPEC agreement, with OPEC members showing poor compliance with previous quotas.
"Historically production control agreements among OPEC members have had a poor success record. Moreover, geopolitical and societal differences among the OPEC members have worked against compliance," said Alan Levine, chairman of Washington, D.C.-based Powerhouse.
However, the oil market is now in its third year with oversupply, and low oil prices have damaged the national budgets of oil producing countries, greasing the skid for OPEC to find common ground and agree to a lower production rate.
"And the assurance by President Putin that Russia will cut as agreed lends a credibility to this deal not present in the past," added Levine.
Brian L. Milne can be reached at email@example.com
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