Oil Pulls Back in Thursday Trade

NEW YORK (DTN) -- New York Mercantile Exchange (NYMEX) spot-month oil futures pulled back Thursday morning after rising overnight to fresh five-day highs for West Texas Intermediate (WTI) and Brent on the Intercontinental Exchange, with ULSD and RBOB easing off four and three-day highs, respectively.

The downside reversal was underpinned by market focus on higher U.S. supply and output, and a Bloomberg survey showing output by 10 producers including Russia allied with the 14-country member Organization of the Petroleum Exporting Countries (OPEC) in cutting production increased slightly last month.

Domestically, the Energy Information Administration's (EIA) data for the week ended Feb. 9 showed U.S. crude oil production rose 20,000 barrels per day (bpd) to a 10.271 million bpd record high, with crude stocks up by a more-than-expected 1.8 million barrels (bbl). Gasoline stocks rose 3.6 million bbl last week and distillate inventory declined by 459,000 bbl.

Early this week, the International Energy Agency (IEA) warned climbing U.S. crude oil output would match the projected growth in global oil demand, and offset the stock declines in the 35 countries making up the Organization for Economic Cooperation and Development.

In its survey, Bloomberg showed the rate of non-OPEC compliance with their oil production agreement fell in January to the lowest level since July. The 10 non-OPEC producers pledged to cut production by 600,000 bpd while OPEC promised to cut 1.2 million bpd in their 2016 agreement that was implemented in January 2017.

An analyst noted the Bloomberg survey was bearish for the market when combined with higher U.S. output, offsetting the weaker dollar and an equities rally that boosted the oil futures market overnight.

The Joint Ministerial Monitoring Committee, which is made up of Russia and four OPEC members including Saudi Arabia, will meet on Feb. 17 to review compliance data and release official statistics.

On Wall Street this morning, the greenback was trading near a two-week low, while the Dow Jones Industrial Average climbed for the fourth day in a row. Dow futures rose 200 points and the S&P 500 index surged 16 points ahead of their open, following gains in Asia and Europe amid risk-on trade.

At 9 a.m. ET, NYMEX March WTI crude futures were down 48 cents at $60.12 bbl, holding above psychological $60 mark. April Brent crude slipped 73 cents to $63.63 bbl, off a $65.15 five-day high.

NYMEX March ULSD futures declined 1.51 cents to $1.8693 gallon, reversing off a high off $1.9039. March RBOB futures were little changed, down 0.24 cents at $1.7106 gallon, off a high of $1.7336.

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