Oil Futures Little Changed Fri. Morning

NEW YORK (DTN) -- New York Mercantile Exchange oil futures were little changed Friday morning, paring overnight gains ahead of a weekly rig count report by Baker Hughes, Inc. due out at 1:00 p.m. EDT.

A quick survey of analysts showed the market expects the rigs report to indicate the number of oil rigs deployed this week to the nation's oil patch fell by three. As of the week-ended Aug. 11, there were 372 more oil rigs active than a year earlier, with the total rig count at a 768 better than two-year high.

In overnight trade, the oil futures complex extended Thursday's gains, supported by moderate trader optimism over the continued drawdown in U.S. crude inventories and the weaker dollar.

On Wednesday, Energy Information Administration issued a report that showed signs of supply tightness in the United States. Total crude stocks have consistently posted steep draws over the past two months, down 8.9 million barrels (bbl) to a 466.5 million bbl 19-month low during the week-ended Aug. 11, and down 69 million bbl, or nearly 13%, from the 535.5 million bbl peak seen at the end of the first quarter, according to the report.

However, the upside for oil futures was curbed by continued increases in domestic crude production. The EIA report showed production rose by 79,000 bbl last week to a 25-month high of 9.502 million barrels per day (bpd).

Globally, commercial stocks held by developed nations stood at 3.021 billion bbl on June 30, down from 2016 levels, but still more than 219 million bbl above the five-year average, according to the International Energy Agency.

A weaker dollar and technical factors lent support to futures, helping the complex recover after posting three- to four-week lows on Thursday. The September West Texas Intermediate crude, ULSD and RBOB futures contracts bounced off support levels during overnight, although short-term trend remains down.

At 9 a.m. EDT, September WTI crude futures were up 4 cents at $47.13 bbl, having traded overnight to a two-day high of $47.38 after bouncing off Thursday's $46.46 fresh three-week spot low, with a $46.23 technical support holding firm.

October Brent crude on the IntercontinentalExchange was at parity with Thursday's settlement of $51.03 bbl and off a $50.00 three-week spot low. The Brent premium over WTI at $3.90 bbl was near the biggest premium since November 2015, which was reached day prior at $3.94 bbl. In addition, the Brent forward curve has also moved from contango into backwardation, which is a bullish market sign.

The September ULSD futures contract was also at parity with Thursday's settlement at $1.5820 gallon, and September RBOB futures contract edged up 0.79 cent to $1.5948 gallon. RBOB market is seasonally backwardated.

George Orwel can be reached at george.orwel@dtn.com