Oil Futures Settle Little Changed

NEW YORK (DTN) -- Spot-month New York Mercantile Exchange oil futures ended little changed this afternoon from Monday's settlements, with the market trading within a tight range in front of the American Petroleum Institute's report that's expected to show rising domestic crude supply and stock draws for refined products.

"The market is going nowhere and volatility is very low because trade volume [is] so low [...] as we wait for [the] API report," said analyst Phil Flynn at Price Futures.

The API is set to issue its weekly oil report at 4:30 p.m. EST covering the week-ended March 3. The market expects a U.S. crude stock build of 2.0 million barrels (bbl) to have occurred last week and for stock draws of 2.0 million bbl and 1.0 million bbl for gasoline and distillates, respectively.

"Also, there were countervailing forces of Saudi Arabia trying to support oil prices while speaking at CERAWeek against the EIA revising crude oil production higher in 2017," said David Thompson, executive vice president at Powerhouse, a Washington, D.C., brokerage firm.

The EIA released its Short-term Energy Outlook today, with the government agency revising expectations for U.S. crude production 200,000 barrels per day (bpd) higher for this year and in 2018 from their forecast in February. EIA expects U.S. crude output at 9.21 million bpd this year compared with 8.88 million bpd in 2016, which climbs to 9.73 million bpd in 2018.

The oil complex was boosted earlier in the session by reports from the EIA, the International Energy Agency and Goldman Sachs this week that suggested global oil supply is tightening.

In its STEO, EIA revised up its global oil demand estimate due to stronger global economic growth, but warned the market's fundamental outlook remains complicated by the fact that oil production cuts by the Organization of the Petroleum Exporting Countries are being partially offset by rising production by non-OPEC producers, especially in the United States.

Nonetheless, EIA said the market is showing signs of closer balance between supply and demand in early 2017 thanks to the 1.758 million bpd in production cuts agreed to last year and are currently being implemented by OPEC and their 11 non-OPEC partners.

These producers "appear to be achieving a high degree of compliance" with the supply cuts. EIA estimated that global oil inventories fell at a rate of almost 1.0 million bpd in February, the third-largest monthly decline rate since the beginning of 2014.

OPEC and non-OPEC producers reported that they achieved an 86% conformity level with their supply agreement, with OPEC achieving a 94% compliance rate. The agreements are aimed at ending a worldwide oil supply glut now in its third year.

Spot-month NYMEX April WTI futures settled down 6 cents at $53.14 bbl, reversing off a three-day high of $53.80. On the IntercontinentalExchange, May Brent crude futures slid 9 cents to a $55.92 bbl settlement, reversing off a four-day high of $56.65, and trading at a premium of $2.78 bbl over spot-month WTI.

In products trade, NYMEX April ULSD futures eked out a 0.94 cent gain to settle at $1.6139 gallon after paring gains from a four-day high of $1.6384. The NYMEX April RBOB futures contract edged up 0.75 cent to $1.6798 gallon at settlement after paring gains from an early session rally to a four-day high of $1.7043.

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