NEW YORK (DTN) -- New York Mercantile Exchange oil futures declined Monday morning after Baker Hughes reported on Friday that U.S. drillers added 12 rigs to the oil patch last week, raising concerns about increasing domestic crude oil production.
Total active oil rigs are now at a five-month high of 759 and 193 higher than a year ago, Baker Hughes data showed. This comes as the Energy Information Administration showed U.S. crude production increased during the week-ended Jan. 19 by 128,000 barrels per day (bpd) to a nearly five-decade high of 9.878 million bpd, up 917,000 bpd versus a year earlier.
However, EIA also showed a 10th straight weekly U.S. crude oil stock draw, down 1.1 million barrels (bbl) to a 411.6 million bbl better than 2-1/2 year low during the week-ended Jan. 19, and down 76.7 million bbl or 15.7% versus supply on-hand a year ago.
The consecutive weekly U.S. crude draws driven by strong demand, a weak U.S. dollar that's trading at a three-year low, and comments from the energy ministers from Saudi Arabia and Russia that a production agreement between members of the Organization of the Petroleum Exporting Countries and 10 non-OPEC oil producers would continue into 2019 combined to push crude oil futures prices to new highs last week.
OPEC and 10-non-OPEC partners led by Russia earlier this month reported strong compliance with 1.8 million bpd in production cuts, which took effect Jan. 1, 2017, and runs through the end of 2018.
Data from the Commodity Futures Trading Commission showed money managers cut their upside market risk in NYMEX crude futures and added to existing length in RBOB and ULSD futures during the week of Jan. 23.
In early trade, NYMEX March West Texas Intermediate crude oil futures fell 69 cents to $65.45 bbl, moving further away from last week's 38-month spot high of $66.35. March Brent crude on the Intercontinental Exchange was down 83 cents at $69.69 bbl, down from last week's 38-month spot high of $71.28 bbl, with the April contract down 80 cents at $69.35 bbl. The Brent premium over WTI at $4.24 was near 5-1/2 month low.
NYMEX February ULSD futures fell 2.41 cents to $2.1119 gallon while the March contract was down 2.38 cents at $2.12037 gallon. February RBOB futures eased 0.27 cent to $1.9350 gallon while the March contract was down 0.54 cent at $1.9209 gallon.
The March Brent contract and the February RBOB and ULSD contracts are set to expire at the close of trade on Wednesday, Jan. 31.
George Orwel can be reached at email@example.com
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