Oil Settles Mixed With Upside Bias

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures ended mixed with an upside bias Tuesday, with weakness in equities weighing against positive comments by the Organization of the Petroleum Exporting Countries that provided support to the futures complex.

"The OPEC comment over the weekend that they want to keep oil price high is what's supported this [oil futures] market early today [Tuesday], but we've also had the stock market under pressure...that's what's weighing on this [oil] market now," said analyst Phil Flynn at Price Futures.

Russia, Saudi Arabia and four other OPEC producers who are members of the OPEC/non-OPEC Joint Ministerial Monitoring Committee held a meeting this past weekend to review compliance with their two-year agreement to reduce output by 1.8 million bpd. They said that they see the market is getting tighter, and they expect it to rebalance during the second and third quarters largely due to their supply restraint. In January, they achieved a 133% compliance rate with the agreed to cuts.

This morning, early indications by some analysts estimated U.S. crude stocks declined by 3.5 million bbl nationwide last week, and by 2.0 million bbl at Cushing, Okla., the delivery location for NYMEX West Texas Intermediate futures. However, other analysts this afternoon adjusted their forecasts, with Kyle Cooper at IAF Advisor in Houston now estimating a build of 3.5 million bbl for crude oil stockpiles for the week-ended Feb. 16. Cooper also estimated stock draws of 1.0 million bbl each for gasoline and distillates.

Doug Quigley, an energy specialist at ABN AMRO, said the futures complex came under some pressure toward the end of regular trade on expectation that U.S. crude and gasoline production both rose last week.

The most recent data from the Energy Information Administration released last week showed crude production rose by 20,000 bpd to a 10.271 million bpd record high during the week-ended Feb. 9. Gasoline production tumbled nearly 500,000 bpd to 9.592 million bpd, but was more than 7% higher than the same week in 2017, EIA data showed.

Gasoline imports dropped 108,000 bpd to 638,000 bpd, but remained 5.6% above the corresponding week a year ago, the EIA reported.

"We have not started fuel switching yet, but gasoline production and imports are strong, that's what's putting pressure on RBOB gasoline," Quigley added.

On Wall Street, the Dow Jones Industrial Average was down more than 250 points while S&P 500 index was down 15 points, continuing this month's volatility. The U.S. dollar strengthened, which has an inverse relationship with WTI futures.

NYMEX March WTI crude futures expired 22cts higher at $61.90 bbl after easing off a two-week high of $62.74, with the April WTI contract settling up 24cts at $$61.79 bbl.

ICE April Brent crude futures fell 42cts to a $65.25 bbl settlement, reversing from a two-week high of $65.81. NYMEX March ULSD futures settled 1.73cts to $1.9277 gallon. March RBOB futures were flat, settling down fractionally at $1.7503 gallon after coming off a two-week high of $1.7844.