Oil Lower in Monday Trade
NEW YORK (DTN) -- Spot-month New York Mercantile Exchange oil futures took another leg down at the start of regular trade Monday morning after Friday's decline as traders continue to mull data showing a big rise in the U.S. oil rig count against signs the Organization of Petroleum Exporting Countries and their non-OPEC partners were reducing output pursuant to agreements reached late last year.
Oil services firm Baker Hughes on Friday reported the number of active oil rigs increased by 15 last week to 566, the most in more than a year, with 41 oil rigs added so far in January. The increase followed the prior week's 29 jump in the oil rig count, the most in nearly four years.
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The rig count report highlighted the nation's rising oil production and countered signs of tightening global supply. At 8.961 million bpd, U.S. crude oil production is at a nearly 10-month high, according to the Energy Information Administration. U.S. crude production increased 191,000 bpd during the first three weeks of 2017.
EIA reported crude stockpiles increased by 2.8 million bbl in the week-ended Jan. 20 to 488.3 million bbl, a 5.3% year-over-year surplus. EIA reported gasoline supplies spiked 6.8 million bbl and middle distillate stocks were up 76,000 bbl during the week-ended Jan. 20.
In early trade, NYMEX March West Texas Intermediate futures fell 19cts to $52.98 bbl. The ICE March Brent crude futures contract eased 27cts to $55.25 bbl ahead of its expiration Tuesday afternoon. NYMEX February ULSD futures were 0.5cts lower at $1.6139 gallon, and February RBOB futures were 1.22cts lower at $1.5149 gallon, with both contracts also expiring Tuesday afternoon.
A stronger U.S. dollar also pressured U.S. crude futures, with the dollar index trading at a one-week high.
Globally, OPEC and 11 non-OPEC oil producer countries are reducing their output, which has stirred bullish sentiment in the market. At a meeting on Jan. 22 in Vienna, OPEC and non-OPEC producers said they had cut production by 1.5 million bpd, an 85% compliance rate with their Nov. 30 and Dec. 10 agreements to trim output by a combined 1.758 million bpd. That's better than a 57% compliance rate for cuts enacted in 2009 when OPEC also agreed to lower their supply.
George Orwel can be reached at george.orwel@dtn.com
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