NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled near one-week highs Friday ahead of the three-day weekend break. Strong demand for crude by refiners in the Gulf Coast and Memphis continue to draw down supply at the Cushing hub in Oklahoma.
Comments from Saudi Arabia midweek that the world's major oil producers would stick with their agreement to cut production through the end of 2018 also buoyed the market, offsetting Friday's data by Baker Hughes showing an increase in the number of rigs added to the U.S. oil patch.
"It was a topsy-turvy day for all the markets, but the Saudi comments that they are going to keep the cuts in place for an extended period of time was supportive," said Tom Bentz, vice president for energy derivatives at ABN AMRO.
Saudi energy minister Khalid al-Falih on Wednesday discarded calls for an exit strategy from their supply deal with the Organization of the Petroleum Exporting Countries and 10 non-OPEC producers. He said the group would stick to their two-year plan to reduce output by 1.8 million bpd through December 2018. He said the OPEC-led effort could "overbalance" the market.
Those comments came ahead to this weekend's meeting by the Joint OPEC/non-OPEC Ministerial Monitoring Committee to review compliance with the agreement.
Domestically, NYMEX West Texas Intermediate crude futures were supported by recent and expected crude stock draws at the Cushing delivery location. On Thursday, data firm Genscape estimated a 1.7 million bbl decline in Cushing supply for this week, after the Energy Information Administration on Wednesday detailed a 3.6 million bbl plunge in Cushing supply to a 32.7 million bbl better than three-year low during the week-ended Feb. 9.
"The Cushing stock draw shows the market is still tight because demand for crude is still strong," said analyst Phil Flynn at Price Futures. Andy Lipow, president of Lipow Oil Associates, agreed with those comments, saying he expects more Cushing stock draws for the rest of this month, which would press down total stocks there below 30 million bbl. Oil futures' upside this week has been limited by higher domestic production, with EIA detailing an increase in U.S. crude output to a 10.271 million bpd fresh record high last week.
Friday's Baker Hughes' data showed seven more rigs were deployed this week making it the fourth straight increase that pushed the rig count to 798, the highest since the week-ended April 2, 2015.
In the broader market, the dollar reversed off a three-year low to trade at a two-day high while the Dow Jones Industrial Average was slightly higher after a volatile session. Oil and the dollar have an inverse trading relationship.
NYMEX March WTI crude futures settled up 34cts at $61.68 bbl, off a one-week high of $61.99 and ended the week down 4%. ICE April Brent crude futures gained 51cts to $64.84 bbl, and ended the week up 3.2%. NYMEX March ULSD futures settled up 1.88cts at $1.9104 gallon, up 2.9% for the week. March RBOB futures gained 1.51cts to $1.7509 gallon at settlement, 2.9% higher on the week.
George Orwel can be reached at email@example.com
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