NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures traded to two-week highs Monday morning. This came after Russia, Saudi Arabia and five other members of the Organization of the Petroleum Exporting Countries said they see the market rebalancing during the second and third quarters, with their two-year agreement to cut 1.8 million bpd working to tighten the market.
The five-member OPEC/non-OPEC Joint Ministerial Monitoring Committee said crude oil inventories held by the Organization for Economic Cooperation and Development were declining rapidly due to the supply cuts. The producers achieved a compliance rate of 133% in January, the group added.
OPEC officials said they expect their members to continue meeting their pledges to restrain production. OPEC production declined by 8,000 bpd to 32.3 million bpd in January, based on secondarily sourced data, with Libya production at 978,000 bpd while Nigeria produced 1.82 million bpd, the latest OPEC Monthly Oil Market Report shows.
Domestically, some analysts estimate U.S. crude stocks declined last week by 3.5 million bbl, with supply at Cushing hub in Oklahoma is seen down 2.0 million bbl, which is above last Thursday's estimate by data firm Genscape that Cushing supply declined by 1.7 million bbl. Cushing is a key location because it is the delivery hub for NYMEX West Texas Intermediate crude.
On products, U.S. distillates supply is seen down 2.5 million bbl and gasoline is estimated to have risen by 2.0 million bbl for the week-ended Feb. 16.
The upside for oil futures is limited, however. On Friday, Baker Hughes reported the number of active oil rigs increased last week by seven to 798, the highest since week-ended April 2, 2015.
On Wall Street, the Dow Jones Industrial Average and S&P 500 index were both down about 0.3% at their open, while the U.S. dollar rose to a near one-week high, with a stronger dollar bearish for WTI futures. In early trade, NYMEX March WTI crude futures were 33cts higher at $62.01 bbl ahead of expiration this afternoon, with the April contract trading at near parity with the expiring contract.
ICE April Brent crude futures fell 54cts to $65.13 bbl, reversing from a two-week high of $65.70. The Brent contract traded at a $3.12 bbl premium to WTI. NYMEX March ULSD futures climbed 2.15cts to $1.9319 gallon and March RBOB futures gained 1.67cts to $1.7676 gallon.
George Orwel can be reached at email@example.com
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