Oil Mixed in Monday Trade

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures moved shallowly mixed Monday morning in thin trade after the three-day Easter holiday weekend, with technical resistance holding at $53.33 for the May West Texas Intermediate crude and at $1.6685 for May ultra-low sulfur diesel contract.

The May WTI futures contract was down 8cts at $53.10 bbl and ICE June Brent contract was down 10cts at $55.79 bbl. NYMEX May ULSD futures were down 0.41cts at $1.6454 gallon while The NYMEX May RBOB futures contract was flat at $1.7358 gallon.

Market participants are expected to square their positions with WTI options set to expire at the end of regular trade this afternoon, ahead of the May WTI contract's expiration on Thursday (4/20).

The market remains under pressure from rising oil output in countries that aren't members of the Organization of the Petroleum Exporting Countries, especially in the United Sates. However, the futures' downside was curbed by data showing strong economic growth in China that's fueling strong demand for oil in the world's second largest economy.

Houston-based oil services firm Baker Hughes, Inc. on Thursday (4/13) said the number of U.S. rigs drilling for oil rose for a 13th straight week to 683, up 11 on the week to the highest level in two years. So far, 158 more rigs have been deployed into the U.S. oil patch this year, and rigs are now up 332 year-over-year.

The rig-count data is an indicator of where production is heading and the latest data came a day after the Energy Information Administration had shown U.S. oil production rose 36,000 bpd to 9.235 million bpd, the highest since mid-January 2016. Domestic production has been rising since bottoming out in July of 2016 at 8.45 million bpd.

The International Energy Agency last week projected global oil demand would slow this year while non-OPEC supply would increase. IEA estimated global demand growth rate of 1.3 million bpd for 2017, revised down from an earlier estimate of 1.4 million bpd growth rate following weaker-than-expected first-quarter demand. Total consumption for the year is estimated at 97.9 million bpd.

The Paris-based agency projected a 485,000 bpd annual increase in non-OPEC production this year to 58.2 million bpd following a 790,000 bpd year-on-year decline in 2016.

OPEC said that based on data gathered from secondary sources its production fell 153,000 bpd in March to average 31.93 million bpd, suggesting OPEC compliance with the 1.2 million bpd in agreed to cuts remains strong. That contrasts with IEA report that showed OPEC crude output fell by 365,000 bpd in March to 31.68 million bpd, led by losses in Nigeria, Libya - both exempt from supply cuts - and Saudi Arabia. OPEC is set to meet May 25 to discuss extending those cuts beyond their June 30 expiration date.

The 11 non-OPEC producers that agreed with OPEC to cut their output by 558,000 bpd will also take part in the meeting. Their compliance rate remains at 64%, according to a private research firm. Russian oil minister Alexander Novak last week said Russia's output would be cut by 250,000 bpd by mid-April and will fulfill its pledge to cut 300,000 bpd by the end of the month.

In China, trade data showed the country's gross domestic product grew by 1.3% during the first quarter while up at 6.9% annualized rate that surpassed estimates of a 6.8% growth rate. Last year, China's GDP grew at 6.7%, the lowest rate in a decade, and Beijing set a target growth rate of 6.5%. China's oil imports rose by 890,000 bpd or 10.7% to a 9.2 million bpd record high in March while up 19.4% year-over-year.

Meantime, traders are getting bullish again. Commitment of Traders' report by Commodity Futures Trading Commission for the week-ended April 11 showed money managers added a cumulative 64,367 contracts of WTI, ULSD and RBOB futures. The total noncommercial sector boosted upside market risk by a combined 31,890 NYMEX oil futures.

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