Oil Futures Pares Gains on Supply Data

NEW YORK (DTN) -- Nearby delivered oil futures on the New York Mercantile Exchange pared overnight gains Monday morning after the Organization of the Petroleum Exporting Countries revised up its non-OPEC supply growth outlook.

OPEC released its Monthly Oil Market Report for February this morning revising up non-OPEC supply in 2017 by 70,000 barrels per day (bpd) to 57.86 million bpd, representing growth of 860,000 bpd, OPEC said.

For 2018, the non-OPEC supply forecast was revised 320,000 bpd higher to an average of 59.26 million bpd, representing growth rate of 1.40 million bpd, which was also revised up by 250,000 bpd. Expectations for higher production in the United States, Mexico, United Kingdom, Brazil, and China were the main reasons behind the upward adjustment, said OPEC.

The MOMR lifted expectations for U.S. total liquids supply in 2018 by 160,000 bpd from last month for year-on-year growth rate of 1.3 million bpd, with 1.1 million bpd mainly from the major shale plays. U.S. natural gas liquids production was boosted by 40,000 bpd from January, with U.S. oil supply for 2018 expected at 15.63 million bpd for an annual growth rate of 1.3 million bpd or 9.1%.

"In line with the existing overhang, the market is only expected to return to balance towards the end of this year," said OPEC.

On demand, the report revised up global oil consumption for this year by 60,000 bpd versus last month's report amid a strong economic outlook. The OPEC report projects a 2018 demand growth rate at 1.59 million bpd from 2017 levels to a total of 98.6 million bpd.

Oil futures rebounded overnight as markets consolidated after last week's steep correction, with the U.S. dollar remaining near a two-week high versus its global rivals. On Wall Street, the Dow Jones Industrial Average and S&P 500 index opened 160 and 20 points higher, respectively, tracking higher European indices following last week's selloff.

At 9:30 a.m. EST, NYMEX March West Texas Intermediate crude futures were 63 cents higher at $59.83 per barrel (bbl), off a high of $60.83, following Friday's six-week spot low at $58.07. April Brent crude oil on the ICE platform gained 51 cents to $63.30 bbl, moving off a high of $64.40, after posting a two-month spot low of $61.77 on Friday.

NYMEX March ULSD futures were little changed at $1.8557 gallon, having traded to a $1.8919 high, and off Friday's $1.8302 3-1/2 month spot low. March RBOB futures was fractionally higher at $1.7044 gallon, giving back gains after posting a high of $1.7392 earlier, and off Friday's seven-week spot low of $1.6704.

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