Oil Futures Settle Lower
NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled lower Tuesday afternoon under pressure from a reported increase in Libyan oil production.
Libya's National Oil Corp. said their oil production would rise to 800,000 bpd next month, with the goal of reaching 1.1 million bpd by August. Security problems have kept Libyan supply below their 1.6 million bpd capacity for several years, but officials hope they've turned the corner.
Along with higher production from the United States and Nigeria, the Libyan supply is expected to offset ongoing output cuts by the Organization of the Petroleum Exporting Countries. OPEC said in its May Monthly Oil Market Report that Nigerian oil production rose by 50,800 bpd to 1.5 million bpd in April based on secondary sources.
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U.S. crude production was at a 20-month high of 9.32 million bpd during the week-ended May 19, with crude stocks at 516.3 million bbl, 109.2 million bbl above their five-year average, according to the Energy Information Administration.
The market also continued to show disappointment that OPEC and their 10 non-OPEC partners didn't agree to cut production more aggressively in order to rebalance supply and demand this year.
Fourteen OPEC and 10 non-OPEC producing countries agreed Thursday (5/25) to extend production cuts of nearly 1.8 million bpd by nine months through March 2018 without increasing the size of the output cuts.
The production cuts have been in place since Jan. 1 and were initially scheduled to expire on June 30. So far, they've not achieved the goal of bringing back global supplies to their five-year average. OPEC is set to meet again on Nov. 30 to review whether or not this agreement is successful.
NYMEX July West Texas Intermediate crude futures settled down 14cts at $49.66 bbl, paring losses after trading to a session low of $49.03. July Brent crude oil futures on the IntercontinentalExchange tumbled 45cts to a $51.84 bbl settlement, off a $51.19 two-day low. The July Brent contract expires at the close of regular business on Wednesday.
The Brent contract closed the session at a $2.18 bbl premium to WTI, the smallest premium in a month. Technical support levels held at $47.88 for WTI futures and at $49.71 for the Brent contract.
NYMEX June ULSD futures settled 1.39cts lower at $1.5494 gallon while June RBOB futures eased 0.37cts to a $1.6389 gallon settlement. The June product futures contracts expire at the close of regular trade Wednesday.
George Orwel can be reached at george.orwel@dtn.com
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