Oil Futures Settle Mixed, Upside Bias

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled mixed Monday afternoon with Brent crude on the Intercontinental Exchange supported by comments from Saudi Arabia that the Organization of the Petroleum Exporting Countries and 10 nonmember producers could extend their production cuts beyond 2018.

At a meeting on Sunday of five-member committee of OPEC and non-OPEC producers monitoring the current production cuts of 1.8 million bpd, Saudi Arabian energy minister Khalid al-Falih said a consensus was emerging from key OPEC members to extend their supply agreement into 2019 in some shape or form. Al-Falih's comments were echoed by Russian energy minister Alexander Novak.

No final decision has been made and the comment still doesn't have the support of all of OPEC's 14 members. But al-Falih is an influential figure within OPEC, with Saudi Arabia OPEC's top oil exporter. In the fall of 2016, he negotiated the current oil supply agreement on behalf of OPEC while Novak led the 10 non-OPEC producers. The deal was implemented in January 2017, with an expiration now scheduled for the end of 2018.

On Friday (1/19), the Paris-based International Energy Agency revised up its outlook for non-OPEC supply growth for 2018 by 100,000 bpd for year-on-year growth of 1.7 million bpd and output of 59.8 million bpd.

Domestically, an early survey of analysts shows the market expects U.S. crude oil inventories to have declined for 10 straight weeks through Jan. 19, calling for a 3.25 million bbl draw for last week. The survey was mixed on products, with gasoline supply seen up 2.25 million bbl last week and distillates estimated to have been drawn down by 1.75 million bbl.

The American Petroleum Institute will issue its weekly supply report Tuesday afternoon, with data from the Energy Information Administration set for release on Wednesday.

The February West Texas Intermediate crude contract expired little changed on the session while the RBOB contract gained on speculative buying, said analyst Phil Flynn at Price Futures.

"The market is holding above some decent support and it appears hedge funds are still not selling their long positions," he said.

NYMEX February WTI crude futures expired up 12cts at $63.49 bbl while the March contract settled up 26cts at $63.57. ICE March Brent crude gained 42cts to $69.03 bbl. NYMEX February ULSD futures eased 0.15cts to $2.0569 gallon and February RBOB futures climbed 1.65cts to $1.8801 gallon settlement after trading near Thursday's (1/18) 4-1/2-month spot high of $1.8859.

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