CRANBURY, N.J. (DTN) -- Oil futures with nearest delivery traded on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange edged higher Monday, with West Texas Intermediate and Brent crude reversing from two-week highs while RBOB and ULSD futures consolidated within Friday's trade range.
The about-face following Friday's selloff was instigated by expectations Nigeria and Libya would be asked to join production cuts underway by the Organization of the Petroleum Exporting Countries amid their rapidly rising output rates, with Nigeria and Libya both OPEC members, but exempt from the production agreement due to internal strife that had hobbled their oil production and economies.
OPEC in November 2016 agreed to cut production by 1.2 million bpd and was joined by 10 non-OPEC oil-producing countries, which include Russia, in reducing their output by 558,000 bpd. The initial agreement ran for six months starting Jan. 1, and was extended in late May through March 2018.
Rapidly rising crude production in the United States led by tight oil output joined by production gains in Nigeria and Libya, not to mention higher output from Canada, offset much of the cut supply by OPEC and non-OPEC to pressure prices. OPEC and Russia initially resisted calls to make even deeper cuts, although news over the weekend suggested Russia would be willing to consider an agreement with a greater reduction in supply.
Yet, as Libyan and Nigerian crude production has surged, with Nigerian output in particular projected to continue rising this summer, OPEC is expected to seek cooperation from the two members at a July 22-24 OPEC, non-OPEC committee meeting in Russia.
OPEC, citing secondary sources, last reported crude production from Libya at 730,000 bpd in May, which has now reached a 1.005 million bpd four-year high, according to news reports. BP's 2017 Statistical Review released in June shows Libyan output in 2016 at 426,000 bpd, accounting for a world market share of 0.5%.
Nigerian output, which averaged 2.053 million bpd in 2016 according to the BP review, 2.2% of global market share, was at 1.68 million bpd in May, secondary sources cited by OPEC in their latest Monthly Oil Market Report show.
In May, the chairman of the Nigerian National Petroleum Corporation projected Nigeria's crude production to reach 2.2 million bpd by June and 2.5 million bpd in August.
OPEC is scheduled to release its MOMR for July on Wednesday (7/12).
NYMEX August WTI futures reversed from a $43.65 two-week low to settle up 17cts at $44.40 bbl, while September Brent crude reversed off a $46.11 two-week spot low to settle 17cts higher at $46.88 bbl.
NYMEX August RBOB futures settled up 0.23cts at $1.5007 gallon, with August ULSD futures ending the session 0.54cts higher at $1.4536 gallon.
Brian L. Milne can be reached at firstname.lastname@example.org
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