NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures were little changed at the start of a new trade week Monday morning after trading mixed overnight, with June West Texas Intermediate crude, ULSD and RBOB futures attempting to stabilize after last week's losses of 6.3%, 4.5% and 2.8%, respectively.
Technical indicators point to a downtrend for oil futures contracts while the U.S. dollar index moved higher from a six-month low. The market is weighing rising U.S. oil output against the prospect of the Organization of the Petroleum Exporting Counties and their 11 non-OPEC allies extending their nearly 1.8 million bpd in production cuts for another six months after they expire on June 30.
Houston-based oil services firm Baker Hughes, Inc. on Friday reported the number of rigs drilling for oil in the U.S. rose by six to 703 last week, increasing for the 16th straight week to the highest count since April 24, 2015.
Domestic oil production increased by 28,000 bpd to 9.293 million bpd during the week-ended April 28, the Energy Information Administration said last week, and total crude oil supplies were 15.7 million bbl higher than a year ago level.
OPEC is scheduled to meet on May 25 to discuss market conditions. Saudi Arabia last week gave assurance that Russia would support an extension of the current production cuts. Saudi Oil Minister Khalid al-Falih indicated the possibility of prolonging the cuts beyond 2017. Analysts said extending the cuts to 2018 would help eliminate the current supply overhang.
Since April 19, the spot-month WTI, ULSD and RBOB contracts have each lost about 13%, while IntercontinentalExchange Brent has fallen 12% after bearish supply and demand fundamentals prompted liquidation of long futures positions.
Commodity fund traders were sellers of over 100,000 contracts of crude oil and oil product futures during the week ended May 2, extending the retreat in speculative oil futures length.
In the past two Commitments of Traders' reports, money managers have reduced upside market risk by nearly 200,000 oil futures. The total noncommercial category, which includes managed funds, pension funds, and other investors, cut total upside market exposure by 64,784 oil futures.
Gasoline demand has been soft over the past few weeks, but analysts expect gasoline demand to rebound during the summer months, with product exports also seen rising.
EIA data last week showed total U.S. petroleum demand increased during the week ended April 28 to 19.9 million bpd, the highest since March 3. Distillate fuel supplied averaged 4.2 million bpd over the prior four weeks, up 3.3% versus a year ago.
At 9:00 AM ET, the NYMEX June WTI futures contract was 24cts lower at $45.98 bbl, moving off Friday's $43.76 5-1/2-month spot low, with technical support seen holding at $44.09.
ICE July Brent crude oil futures were down 27cts at $48.83 bbl, moving off Friday's $46.64 five-month spot low, with support at $46.42. The Brent premium to WTI was little changed from Friday at $2.85 bbl.
NYMEX June ULSD futures edged up 0.29cts to a $1.4395 gallon, moving off Friday's 5-1/2 month spot low of $1.3748 and support at $1.4148. The June RBOB futures contract nudged 0.48cts higher to $1.5094 gallon in early trade, moving off Friday's $1.45 five-month spot low. Support for RBOB is pinned at $1.4373.
George Orwel can be reached at firstname.lastname@example.org
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