Oil Futures Settle Mixed

NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled mixed on Wednesday afternoon amid profit-taking following oversold market conditions after the spot-month West Texas Intermediate crude contract rallied for six straight sessions.

After advancing to fresh highs overnight, oil futures faded to trade on either side of unchanged. Nearest delivered WTI futures reached a five-week high, ULSD futures a seven-week high and RBOB futures traded near a 21-month high during the session.

The early gains were driven by bullish sentiment, technical support, geopolitical risks and falling oil supplies in the United States and globally. However, the market started to wobble midway through the morning session amid overbought market conditions.

The May WTI futures contract again slipped below the $53.30 retracement point to settle down 26 cents at $53.11 per barrel (bbl).

"I hear some people pointed to the increase in Cushing crude supply but I think this was all about profit-taking after we were up for several days in a row, and they market was feeling overbought," said analyst Phil Flynn at Price Futures Group in Chicago.

The Energy Information Administration reported crude supply at the crucial Cushing hub in Oklahoma, rose 300,000 bbl to a fresh record high of 69.4 million bbl during the week-ended April 7.

However, U.S. commercial crude oil stocks dropped 2.2 million bbl to 533.4 million bbl, leaving stocks at a 5.6% year-over-year supply surplus, despite domestic crude production rising another 36,000 bpd and is now over 800,000 barrels per day (bpd) higher than the recent trough, EIA data shows.

Total petroleum inventories including the Strategic Petroleum Reserve fell more 5.0 million bbl during the week-ended April 7, down 5.3 million bbl to 2.0242 billion bbl, and 3.5 million bbl below year ago.

"This is the first year-over-year total petroleum storage deficit since August 29, 2014," said analyst Kyle Cooper at IAF Advisors. "Total petroleum demand was below last year for the 2nd week in a row and the 4-week moving average is now just flat to last year. The overall report was bullish, but with US oil production considered rather bearish."

Gasoline supplies fell by a more-than-expected 3.0 million bbl last week, while implied demand rose by a modest 30,000 bpd to 9.275 million bpd, down almost 4% versus the same week in 2016.

Analysts said they expect gasoline consumption to improve heading into the summer peak driving months, citing strong crack spreads that would incentivize refiners to boost runs.

Distillate stocks fell a more-than-expected 2.2 million bbl last week, but demand for the fuel surged 537,000 bpd to 4.635 million bpd last week, 20.3% higher year-over-year.

Internationally, the Organization of the Petroleum Exporting Countries issued a report showing the producer group's crude oil production fell by 153,000 bpd in March.

The report also revised up expectation for non-OPEC oil supply in 2017 by 176,000 bpd, OPEC said in their Monthly Oil Market Report for April released earlier this morning.

Citing secondary sources, MOMR showed OPEC crude production at 31.928 million bpd in March, 17.6% below their 32.5 million bpd production quota agreed to in November and 1.157 million bpd below December output.

Saudi Arabian production fell by 111,000 bpd to 9.9 million bpd in March and the kingdom reportedly supports an extension of the output cuts beyond June when the six-month quota scheme is set to expire. OPEC meets May 25 to debate the issue.

The IntercontinentalExchange June Brent contract settled down 37 cents at $55.86 bbl, reversing off a $56.65 five-week spot high. NYMEX May ULSD futures were little changed, settling 0.14 cent higher at $1.6520 gallon after reversing off $1.6661 seven-week high on the spot continuation chart.

The NYMEX May RBOB futures contract settled 1.60 cents lower at $1.7417 gallon after reversing off a $1.7710 near 21-month high of on the spot continuation chart.

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