Oil Ends Tuesday Mixed

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled mixed Tuesday afternoon as profit-taking continued after recent gains amid concern about higher crude oil supply in the domestic and global markets. However, the downside was limited as a raft of weekly and monthly statistics on demand and supply fundamentals expected over the next two weeks.

"Is there more downside in the offing? My view is nothing significant until refineries start to throttle back for fall maintenance," said David Thompson, executive vice president at Powerhouse in Washington, D.C. "September 25th was a big day up in nearly all energy markets, and refined products prices have now given back all of that day's gains and then some while the crude oil price is basically back to even versus the start of that day."

The selling seen on Monday and Tuesday has been driven largely by supply concerns. Crude output by the Organization of the Petroleum Exporting Countries rose by 50,000 bpd in September, a Reuters survey shows, while Bloomberg showed OPEC production increased 120,000 bpd to 32.83 million bpd last month due to an increase in output from Libya and Nigeria, two nations that are exempt from the agreement between OPEC and 10 non-OPEC producers to cut 1.8 million bpd of production from January through March 2018.

Russian energy minister Alexander Novak told a Moscow magazine today that he sees an immediate need for talks to deepen the cuts. Novak has had discussions with his Saudi Arabian counterpart to extend the cuts through June 2018 so as to support oil prices.

Domestically, U.S. oil production is projected to exceed the June 2015 peak at 9.61 million bpd in the next few weeks, as the number of rigs drilling for oil increases. As of the week-ended Sept. 22, domestic oil output was at a 27-month high of 9.547 million bpd, according to U.S. Energy Information Administration.

A DTN survey showed analysts mixed on their expectations for weekly U.S. petroleum supply data, but on average estimate a 500,000 bbl crude stock draw and 750,000 bbl stock builds each for gasoline and distillates for the week-ended Sept. 29.

The American Petroleum Institute will issue its weekly oil data at 4:30 PM ET while EIA's weekly oil report is due at 10:30 AM ET Wednesday.

NYMEX November West Texas Intermediate crude contract settled 16cts lower at $50.42 bbl after testing technical support at $50.31. December Brent crude futures on the ICE platform declined 12cts to $56.00 bbl after testing support at $55.92. The Brent premium over WTI was $5.58 bbl at the close.

NYMEX November ULSD futures dropped 1.60cts to $1.7505 gallon, off a better than two-week spot low of $1.7407, while November RBOB futures reversed higher, settling up 1.02cts to $1.5655 gallon.

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