NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled mixed Monday afternoon with West Texas Intermediate crude oil easing alongside the IntercontinentalExchange May Brent crude futures while the RBOB contract rose to a 10-day high and ULSD posted modest gains.
The April WTI contract dropped to a one-week low in light volume amid book squaring ahead of its expiration on Tuesday, March 21, with additional pressure coming from reports saying Libyan oil exports could increase over the coming week after government forces regained control of two key export terminals from rebels. The Libyan news also pressed Brent prices lower.
"The deciding factor for the market selloff was the report that Libya will reopen their ports... That [news] was enough the get the market to selloff," said Phil Flynn at Price Futures.
Tim Evans, an energy specialist at Citi Futures, also said the ongoing uptrend in U.S. drilling and production was "keeping a lid on market sentiment at least for now," adding that, "While lower than expected Saudi production figures from the Joint Organizations Data Initiative could be considered a support, we note these were January figures that constitute a bit of a long look-back for most futures traders and risk managers."
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On Friday, oil services firm Baker Hughes, Inc. reported the number of active U.S. rigs drilling for oil had increased by 14 to reach 631 rigs, rising for the ninth straight week to the highest count in 18 months.
That rig-count report followed a report two days earlier by the Energy Information Administration showing a hike in domestic crude production of 21,000 barrels per day (bpd) to a 9.109 million bpd one-year high as of the week-ended March 10.
Taken together, the reports about Libya and U.S. supply set off a fresh round of length reduction in Brent and WTI crude futures amid concern the Organization of the Petroleum Exporting Countries and their 11 non-OPEC allies won't achieve their goal of reducing global supply by 1.758 million bpd during the first half of this year. OPEC compliance with the decision to cut output was strong at 98% in February, according to the International Energy Agency, but those efforts are being undermined by relentless increase in U.S. production, analysts said.
Libya's National Oil Company said oil shipments from Ras Lanuf and Es Sider, the country's two largest ports, will resume in seven to 10 days after Libya National Army forces grabbed control of the facilities from rebels last week for the first time since March 3. Libya said the ports are now ready to restart exports. OPEC's Monthly Oil Market Report for March released last week cited secondary sources as showing Libyan oil production fell by 11,100 bpd to 669,000 bpd in February.
At settlement, NYMEX April WTI futures eased 56 cents to $48.22 per barrel (bbl), off a $47.84 one-week low, and the May WTI futures contract was down 40 cents at $48.91 bbl.
On ICE, May Brent crude futures eased 14 cents to $51.62 bbl, off a $51.01 one-week low. In arbitrage trade, the Brent premium over WTI rose 42 cents to a $3.40 bbl better-than one-year high.
In products trade, NYMEX April ULSD futures edged 0.56 cent higher to settle at $1.5141 gallon and the NYMEX April RBOB futures contract was up 1.24 cents at $1.6115 gallon settlement, off a 10-day high of $1.6248.
Flynn said the gains for RBOB were seasonally-related, with "summer demand kicking in soon."
George Orwel can be reached at email@example.com
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