NYMEX Oil Futures End Thursday Mixed

NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled mixed Thursday afternoon with the West Texas Intermediate and RBOB contracts ending higher after paring gains while ULSD futures reversed down from a nearly three-year high to settle lower.

Brent crude on the Intercontinental Exchange edged higher on the session after briefly trading at $70 bbl for the first time in more than three years, trading lower in after-hours business on profit-taking.

"We had profit-taking today [Thursday] but the market remains optimistic because it's getting balanced due to strong demand and OPEC cuts," said Tom Bentz, vice president at ABM AMRO.

"Brent has been the leader of the recent rally…everybody has been looking at the $70 target for some time and so once we got there today [Thursday], there was a signal to sell," said Phil Flynn at Price Futures. Technical indicators also show overbought market conditions for oil futures.

"We still see hurdles at $65 for WTI and $70 for Brent but once we get over those levels, the market could continue up," said Bentz. NYMEX February WTI futures settled 23cts higher at $63.80 bbl after trading at a $64.77 three-year high on the spot continuous chart. March Brent crude futures on the ICE platform eked out a 6cts gain with a $69.26 bbl settlement, having traded at a better than three-year spot high of $70.05.

NYMEX February ULSD futures settled 0.40cts lower at $2.0767 gallon, reversing down from a nearly three-year high on the spot continuous chart of $2.0998. February RBOB futures edged 0.43cts higher to a $1.8370 gallon settlement, off a better than four-month spot high of $1.8602.

On Tuesday (1/9), the Energy Information Administration projected global oil demand would increase by 1.72 million bpd to 100.11 million bpd this year, up from growth rate of 1.44 million bpd to 98.39 million bpd in 2017. Also in their Short-term Energy Outlook, EIA forecast global demand to increase at an annual rate of 1.65 million bpd to 101.76 million bpd in 2019.

EIA tied the expected annual increases in global oil demand to strong economic growth in the United States and elsewhere, including China and India.

Greater demand expectations also comes as the Organization of the Petroleum Exporting Countries and 10 non-OPEC producers maintain their production agreement for a second year through the end of 2018. The oil producer alliance has so far managed a strong compliance rate with their 1.8 million bpd in production cuts, which took effect Jan. 1, 2017.

The goal of the production cuts is to reduce oil supply held by the 35 countries that make up the Organization for Economic Cooperation and Development to within their five-year average. Analysts said they expect the market to rebalance by the second half of this year. On Wednesday, the EIA reported U.S. crude oil stockpiles fell for the eighth straight week through Jan. 5, down 4.9 million bbl to a 2-1/2 year low of 419.5 million bbl while 63.6 million bbl or 13.2% lower on the year. Since Nov. 10, U.S. crude supply has been drawn down 39.5 million bbl or 9.4%. The higher settlements by crude futures also comes as President Donald Trump is reviewing the Iran nuclear deal, with the president expected to announce his decision by a Friday deadline. Treasury Secretary Steve Mnuchin said he expected the president to impose new sanctions on Iran, a member of OPEC. If Trump orders sanctions on Tehran that limits oil production or exports, it could have a bullish effect on the oil futures complex, said analysts. Antigovernment protests in Iran this month have also lent upside support to global oil prices.