NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled lower after reversing off multi-week highs amid profit-taking and nagging worries about supply overhang.
"There was profit-taking," said analyst Phil Flynn at Price Futures in Chicago. "It was a knee-jerk reaction to the thinking that [President] Trump's pro-growth agenda is slowing down and that plays into demand concerns while U.S. crude production continues to increase."
There was also book-squaring going into the expiration this afternoon for the August WTI crude after the contract edged above resistance at $47.02 while next target held at $48.20.
The futures complex rallied Wednesday and early Thursday morning after the Energy Information Administration said U.S. crude stocks tumbled 4.7 million bbl to a six-month low of 490.6 million bbl last week. Gasoline stocks also tumbled 4.4 million bbl and distillate stocks declined 2.1 million bbl, the data showed.
However, market focus shifted to domestic crude production that climbed 32,000 bbl to a fresh two-year high of 9.429 million bbl last week. In addition, U.S. demand was mixed, with data showing gasoline falling 194,000 bpd last week, while distillate demand spiked 476,000 bpd on the week and up 10.6% higher year-over-year.
Overseas, supply continues to rise in Libya and Nigeria, while Iraq plans to increase its output by the end of this year despite the fact that Iraq is part of an ongoing OPEC agreement to cut output by 1.2 million bpd through March 2018. On Tuesday, Ecuador said it would not abide by its pledge to cut production by 26,000 bpd because of a need for revenues.
The August WTI futures contract expired 33cts lower at $46.79 bbl, and the September contract settled $0.40 lower at $46.92 bbl.
September Brent crude futures settled 44cts lower at $49.26 bbl. Brent reversed off a six-week spot high of $50.19, and traded at a $2.51 premium to WTI.
The August ULSD futures contract eased 0.78cts to $1.5436 gallon at settlement, after posting a seven-week high of $1.5780. The August RBOB futures contract settled 1.07cts lower at $1.6062 gallon, reversing off a seven-week high of $1.6341 and traded at 3.42cts premium to the September contract.
George Orwel can be reached at email@example.com
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