Oil Futures Moves Lower in Friday Trade

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures moved lower Friday morning amid profit—taking after Thursday's mixed session, including settlements at three-year highs for West Texas Intermediate and Brent on the Intercontinental Exchange.

"It's early profit-taking and the jobs report is accelerating that, but as we get underway we'll begin to focus on the rigs report to see if they rebounded after being flat last week," said analyst Phil Flynn at Price Futures in Chicago. "But as we head to the weekend we could see people wanting not to get too short with all the geopolitical risks around."

This morning, the Labor Department reported a less-than-expected 148,000 jobs were added to the U.S. economy in December, with the market calling for employment gains of 190,000.

Baker Hughes is scheduled to issue its oil rig count report for this week at 1:00 PM ET, with the oil service company last reporting 747 oil rigs in service last week.

U.S. crude production increased by 28,000 bpd to 9.782 million bpd during the week-ended Dec. 29, the Energy Information Administration reported Thursday, 1.012 million bpd higher than a year ago, and near the mid-December 47-year high of 9.789 million bpd.

The relentless increase in domestic crude production is slowing the rebalancing pace for the global oil market, which is tightening amid ongoing oil production cuts led by the Organization of the Petroleum Exporting Countries and 10 nonmember producers.

Unrest in Iran, the third biggest OPEC oil producer, also had supported Brent futures earlier this week, but so far the weeklong protests have not disrupted oil production and exports.

At last look, NYMEX February WTI crude oil futures were 62cts lower at $61.39 bbl while ICE March Brent crude oil futures fell 53cts to $67.54 bbl.

This morning, RBOB and ULSD futures are pressed down by Thursday's EIA data that reported a steep drop in demand and sharply higher supplies, offsetting to some extent frigid winter weather conditions in the Northeast that had rallied heating oil prices this week.

"Heating oil is weaker because weather is supposed to warm up in the days ahead and on stock build for distillates," added Flynn.

The EIA for the week-ended Dec. 29 reported U.S. distillate supply unexpectedly soared 8.9 million bbl as production rose 116,000 bpd and demand for the fuel declined 738,000 bpd to 3.6 million bpd. The report also showed gasoline supply rising a more-than-expected 4.8 million bbl as demand for the fuel plummeted 835,000 bpd during the week reviewed.

The NYMEX February ULSD futures contract tumbled 2.03cts to $2.0567 gallon and the February RBOB futures contract fell 1.76cts to $1.7891 gallon at last look.

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