NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures posted modest gains at the start of regular trade Tuesday morning on apparent short-covering prompted by elevated geopolitical risks and expectations for a domestic crude oil draw.
The prospect for January production cuts by the Organization of the Petroleum Exporting Countries joined by 11 non-OPEC oil producing countries also underpinned the oil futures' early advance.
At last glance, NYMEX January West Texas Intermediate crude futures climbed 54cts to a near one-week spot high of $52.66 bbl, with the contract set to expire later this afternoon. The February WTI contract moved 62cts higher to $53.68. On the IntercontinentalExchange, the February Brent crude futures contract gained 89cts to $55.81 bbl, near a one-week spot high of $55.83.
In products trade, the NYMEX ULSD futures contract edged 0.95cts higher to $1.6785 gallon after inside trade and January RBOB futures added 2.60cts to $1.5899 gallon, off a $1.5908 one-week high.
Domestically, an early survey of analysts this morning showed they expect oil reports to be released later today and Wednesday to show a crude oil stock draw averaging 2.0 million bbl for the week-ended Dec. 16, and were mixed on estimates for refined products.
The American Petroleum Institute weekly report is scheduled to be issued at 4:30 PM ET while data from the Energy Information Administration is set for release at 10:30 AM ET Wednesday.
Globally, Iraq today advised its foreign customers to expect less supply during the first half of 2017, a sign Baghdad will comply with the Nov. 30 agreement by Organization of Petroleum Exporting Countries to reduce its total output by 1.2 million bpd effective Jan. 1, 2017. Wire reports said Iraq will cut its exports by up to 210,000 bpd next month for six months, which could be renewed for another six months.
Saudi Arabia and some of its Arab Gulf allies gave similar indications last week as did non-OPEC Russia, suggesting a level of seriousness on the part of leading oil producers to act in attempt to get rid of excess supply next year.
On the geopolitical front, there is increased tension ahead of Christmas and New Year holidays, with two terror-related attacks occurring over the past 24 hours in Turkey and Germany.
Oil prices are sensitive to geopolitical tensions that sometimes threaten to disrupt supply. Based on their location and other factors, these attacks have not been linked to any attempt to disrupt oil supply, but speculative traders are covering short positions and adding length in the oil futures complex nonetheless.
George Orwel can be reached at email@example.com
© Copyright 2016 DTN/The Progressive Farmer. All rights reserved.