Oil Products Futures End Mixed

NEW YORK (DTN) -- Spot-month New York Mercantile Exchange oil futures settled mixed this afternoon with West Texas Intermediate crude little changed while the RBOB and ULSD contacts posted moderate gains amid short-covering.

"The crude market is chopping around at the same range and the crude prices didn't change much after U.S. rig-count data [issued Friday, March 3] was offset by news that Libyan production is down after their main export terminal was shut down last week," said Tom Bentz, vice president for energy derivatives at ABN AMRO. "WTI is still marking time. There was some support for products but that's because gasoline was oversold and we saw some short-covering there."

At settlement, spot-month NYMEX April WTI futures were down 13 cents at $53.20 per barrel (bbl). On the IntercontinentalExchange, May Brent crude futures were up 11 cents at $56.01 bbl, trading at a premium of $2.81 bbl over spot-month WTI.

In products trade, NYMEX April ULSD futures were up 1.09 cents at $1.6045 gallon and NYMEX April RBOB futures rallied 1.92 cents to a $1.6723 gallon settlement.

The market continues to weight bearish U.S. fundamentals against the global supply outlook.

A Baker Hughes, Inc. report on Friday showed the number of active oil rigs in the United States increased for the seventh consecutive week to a 16-month high of 609 last week. Crude production rose during the week-ended Feb. 24 by 31,000 barrels per day (bpd) to 9.032 million bpd, nearly a one-year high, according to data from the Energy Information Administration. That domestic production rate could increase to 1.4 million bpd over the next five years, the International Energy Agency projected today.

Offsetting the domestic crude supply increase, Libya said its Es Seder export terminal remained shut due to fighting between government forces and rebels, a turn of events that has reduced the country's oil production over the weekend by 50,000 bpd to 650,000 bpd. Libyan output has lagged over the past several years due to such conflicts after producing 1.6 million bpd in 2011.

A senior Iraqi oil official today said the Organization of the Petroleum Exporting Countries would likely need to extend its production cuts into the second half of 2017. The current agreed to OPEC production cuts of 1.2 million bpd are due to end on June 30, with the group saying that its compliance rate has reached 94%. Eleven non-OPEC nations including Russia also agreed to cut another 558,000 bpd but so far their compliance rate has been weak.

The Iraqi comments initially boosted oil prices but they were increasingly hard to sustain since recent data showed Iraq has not fully complied with its pledge to cut its output by 210,000 bpd as part of the Nov. 30 OPEC supply agreement. The country's output was cut by 110,000 bpd in January, according to IEA, while a Platts' survey showed February output by Iraq was 4.4 million bpd, down 80,000 bpd from January.

Today started off a busy week for the market, with a raft of data set for release. The EIA will release its monthly Short-term Energy Outlook midday Tuesday, followed by the American Petroleum Institute's weekly oil report at 4:30 PM ET. The EIA's weekly oil report is set for release midmorning Wednesday, and the Department of Labor's employment report for February is due out Friday morning.

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