Oil Settles Mixed on Thursday

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled mixed Thursday afternoon. The RBOB contract settled at a fresh 4-1/2 month high on speculative buying, ULSD futures ended at a 10-day low on forecasts for moderating weather, while West Texas Intermediate crude and Brent on the Intercontinental Exchange were little changed.

"Money flow and the fact that the futures market is forward looking is the only explanation for this market," said analyst Kyle Cooper at IAF Advisors. "People have in recent weeks been shorting gasoline against the rest of the energy complex and now they looking ahead to the next gasoline season, and so they are covering shorts."

NYMEX February RBOB futures settled 2.51cts higher at $1.8835 gallon, near a $1.8859—the highest settlement on the spot continuation chart since Hurricane Harvey was menacing Houston.

NYMEX February ULSD futures settled 0.74cts lower at $2.0617 gallon, with the contract down on expectation wintry weather conditions will moderate in the coming weeks.

NYMEX February WTI crude oil futures contract settled 2cts lower at $63.95 bbl, and ICE March Brent crude futures ended 7cts lower at $69.31 bbl. The flat session follows recent rallies to three-year highs by the crude contracts, with Brent settling above $70 bbl for the first time since December 2014 on Monday (1/15).

Analysts said WTI crude and Brent were pressured amid concern over a jump in U.S. crude production last week and a forecast for higher-than-previously projected oil output from countries that are not members of the Organization of the Petroleum Exporting Countries.

OPEC this morning revised its supply outlook for non-OPEC oil up 160,000 bpd from their projection in December, forecasting year-on-year non-OPEC supply growth at 1.15 million bpd in 2018 to 58.94 million bpd.

The bearish revision was followed by the Energy Information Administration's weekly supply report released midmorning showing U.S. crude production rebounding during the second week of January by 258,000 bpd to 9.75 million bpd after dropping 290,000 bpd during the first week of the year. Last week, the EIA projected U.S. crude production would climb 1.0 million bpd from 2017 to 10.3 million bpd this year, which would be a record high output rate.