NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled lower Tuesday afternoon, falling for the second straight day to one-week lows. This was amid concern about increasing crude oil production and an expected weekly crude oil stock build in the United States.
"People are nervous that we'll see a buildup in crude stocks and an increase in crude production, so the longs are taking profits," said analyst Phil Flynn at Price Futures.
A DTN survey of analysts show estimates for a 1.75 million bbl crude oil stock build for the week-ended Jan. 26, with gasoline stocks seen down 500,000 bbl and distillate supply estimated down 1.75 million bbl. The American Petroleum Institute will release its weekly oil report at 4:30 PM ET and the Energy Information Administration will release its data series at 10:30 AM ET Wednesday. If EIA statistics confirm the crude estimate, it would be the first increase in 11 weeks.
Speculation that crude production for the week-ended Jan. 26 also rose was based on inference from data issued on Friday (1/26) by oil services firm Baker Hughes showing an increase of 12 oil rigs to a 759 five-month high.
On Jan. 24, EIA showed domestic crude production increased during the week-ended Jan. 19 by 128,000 bpd to 9.878 million bpd, the highest in nearly five decades.
Profit taking Tuesday also follows recent data from the Commodity Futures Trading Commission showing noncommercial traders heavily weighted to the long-side of the market as of the close on Jan. 23, which could accelerate a selloff amid long liquidation.
In addition, Flynn speculated that losses in the equities market may be weighing on the oil market. Jitters have been seen in the stock market this week, with the Dow Jones Industrial Average diving more than 300 points today. However, many other analysts cautioned against getting concerned about transitory market losses, saying investor sentiment remains bullish.
NYMEX March West Texas Intermediate crude oil futures settled $1.06 lower at $64.50 bbl, retreating further from last week's three-year spot high of $66.66, with the contract posting an intraday a one-week low of $64.10 bbl.
NYMEX February ULSD futures settled 3.31cts lower at $2.0717 gallon, near a one-week low of $2.0607, while the March contract was down 3.07cts at $2.0671 gallon. February RBOB futures tumbled 3.95cts to a $1.8954 gallon settlement, near a one-week low of $1.8859, with the March contract plunging 4.53cts to $1.8707 gallon.
The February RBOB and ULSD contracts are set to expire at the close of trade on Wednesday alongside ICE March Brent futures.
On the Intercontinental Exchange, March Brent crude settled down 44cts at $69.02 bbl, with the contract briefly breaking below technical support at $68.50 with a $68.40 one-week low. The April Brent contract settled down 68cts at $68.52 bbl settlement.
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