Oil Mixed in Early Wednesday Trade
NEW YORK (DTN) -- New York Mercantile Exchange oil futures were mixed Wednesday morning ahead of an oil report from the U.S. Energy Information Administration due out at 10:30 AM ET that's expected to show stock draws for crude oil and refined product inventories during the week-ended May 19.
Before July West Texas Intermediate crude futures contract eased this morning, the futures complex posted modest gains overnight on a report issued late Tuesday by the American Petroleum Institute showing stock draws of 1.5 million bbl for crude oil, 3.15 million bbl for gasoline and 1.85 million bbl for distillate fuels for last week.
A survey showed the market expects crude oil stocks to have declined by 2.7 million bbl, gasoline stocks by 800,000 bbl and for a 300,000 bbl distillate stock build to have occurred during the week under review.
This morning, Algerian energy minister Noureddine Boutarfa said the Organization of the Petroleum Exporting Countries and their 11 non-OPEC allies are close to a deal to extend their 1.8 million bpd in production cuts through March 2018.
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A six-month supply agreement currently in effect expires on June 30. Most of the 24 producing countries involved in the current six-month deal now back a proposal for a nine-month extension, although Iran and Kazakhstan haven't publicly offered their support for the longer timeframe, Boutarfa said.
OPEC ministers will meet in Vienna on Thursday to debate and vote on the proposal put forward by Saudi Arabia and Russia to extend production cuts for nine months.
At 9:00 AM ET, NYMEX July WTI crude oil futures contract was 9cts lower at $51.38 bbl, edging off a $51.88 near five-week high on the spot continuation chart. July Brent futures on the IntercontinentalExchange edged up 6cts to a $54.121 bbl open, off a $54.62 five-week spot high.
Brent's premium over WTI at $2.83 bbl represents a retreat from a two-month high of $3.28 posted Friday (5/19).
NYMEX June ULSD futures edged 0.62cts higher to $1.6129 gallon in early trade, edging off a near five-week spot high of $1.6197. June RBOB futures were 0.58cts higher at $1.6672 gallon after trading at a fresh four-week spot high at $1.6750.
Time spread charts show the WTI contango reversing into backwardation in the first quarter of 2018 while RBOB futures are in seasonal backwardation, a bullish market structure.
Technically, overbought pressure is building for the RBOB contract ahead of the Memorial Day holiday weekend, while overbought market conditions have emerged for WTI, Brent and ULSD futures.
In currency trade, the U.S. dollar index remains near a seven-month low in overnight trade ahead of the release of minutes for last month's Federal Open Market Committee meeting. Oil and the dollar have recently returned to an inverse trading relationship.
George Orwel can be reached at george.orwel@dtn.com
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