Oil Settles Mixed; WTI Climbs

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled mixed Friday afternoon with West Texas Intermediate crude a tad higher while RBOB and ULSD slipped. WTI climbed after Baker Hughes said the U.S. oil rig count fell this week, and on midweek data showing a U.S. crude oil stock draw.

"The WTI was positive due to a drop in the rig count and a draw in domestic crude stocks while refined products are down because of bearish midweek data," said analyst Phil Flynn at Price Futures. The number of U.S. active rigs drilling for oil fell by four this week to 747, according to Baker Hughes, the first decline in the rig count since the week-ended Nov. 3. At 751, the U.S. oil rig count is up 213 year-to-date, 237 higher than year prior.

The rig count report suggests a slowdown in drilling activity during the week-ended Friday, although this comes after the Energy Information Administration reported on Wednesday that U. S. crude production rose 73,000 bpd to a 9.78 million bbl fresh 46-year high last week, while 984,000 higher on the year.

The EIA also reported midweek that domestic crude oil stocks tumbled 5.1 million bbl during the week-ended Dec. 8 while gasoline supply surged 5.7 million bbl and distillate supply eased 1.4 million bbl. The market is going to keep a close eye on when the Forties will return to service and the continuing production cuts by the Organization of the Petroleum Exporting Countries that might offset higher oil output in the United States.

The 445,000-bpd Forties pipeline was shut on Tuesday (12/12) after a crack was found in Aberdeen, Scotland, and operator Ineos said it could be many weeks before the line is back in service. Forties contributes 40% of the four crude oil streams feeding North Sea Brent crude, a benchmark that sets prices of other international crudes.

On Thursday, the International Energy Agency kept unchanged its global oil demand outlook but raised its forecast for oil production by non-OPEC, led by U.S. oil production. The agency boosted its forecast for U.S. output growth to 870,000 bpd for 2018, up from prior forecast for an increase of 790,000 bpd.

At settlement, NYMEX January WTI crude oil futures were 26cts higher at $57.30 bbl, down 6cts on the week. ICE February Brent settled down 8cts at $63.23 bbl, down 17cts for the week and closed trading at a $5.93 bbl premium to WTI. NYMEX January ULSD futures eased 0.64cts to a $1.9035 gallon settlement, down 2.53cts on the week. January RBOB futures tumbled 1.59cts to $1.6548 gallon, plunging 6.18cts on the week.

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