Oil Futures Settle Mixed Friday

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled mixed on Friday afternoon with October West Texas Intermediate crude erasing early losses and the ULSD contract closing a tad higher while RBOB futures tumbled amid selling pressure triggered by easing fuel supply concerns.

NYMEX WTI contract, which has been the weakest segment of the futures complex most of this week, edged up near the close on expectation refineries in Texas that are now being restarted after Hurricane Harvey will move quickly to ramp up crude runs and increase short-term demand for crude oil over the coming days.

That upside move contrasts with a retreat by the RBOB futures contract after the Trump administration took measures to ensure there's adequate crude and gasoline supplies in the market, said analyst Phil Flynn at Price Futures.

The Environmental Protection Agency has approved fuel waivers regarding Clean Air Act requirements for gasoline, and the Energy Secretary has approved the release of 4.5 million bbl of crude oil from the Strategic Petroleum Reserve in response to the storm's impact.

That figure includes an additional 3.5 million bbl announced Friday on top of the 1.0 million bbl already approved to be released on Thursday, and those barrels have been released following requests by refiners Phillips 66, Marathon and Valero.

Marathon's Galveston Bay refinery in Texas City raised production to 45% of the plant's 459,000 bpd capacity, while Citgo is beginning to restart its 157,500 bpd Corpus Christi refinery. Flint Hills and Valero were also moving to restart their plants, Reuters reported. The port of Houston also reopened, allowing oil tankers to offload their cargoes. Products pipelines feeding the U.S. Northeast and Midwest markets, including Colonial and Magellan, have been restricted over the past several days, prompting shortages and spikes in both paper and physical gasoline prices. The September RBOB futures contract skyrocketed on Thursday to a 26-month spot high of $2.1705 before expiring at $2.1399 gallon.

On Thursday, Magellan said limited storage and distribution services began at its Corpus Christi terminal after the restoration of electric power midweek.

Today, Texas Gov. Greg Abbott said the state won't run out of gasoline supply, and added that Texas has worked with oil refiners in other states including Louisiana and Oklahoma to send additional supply ahead of the Labor Day holiday weekend.

Houston-based analyst Kyle Cooper at ION Energy also said traders were starting to recognize there is still nearly 230 million bbl of gasoline in storage despite the current short term supply concern.

NYMEX October RBOB futures contract settled 3.13cts lower at $1.7479 gallon while nearest delivery is up 8.19cts on the week. The October ULSD contract settled 0.49cts higher at $1.7468 gallon with the front month contract gaining 12.45cts on the week.

The NYMEX October WTI crude contract settled 6cts higher at $47.29 bbl, down 60cts on the week. ICE November Brent crude eased 11cts to $52.75 bbl.

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