Oil Futures at 3-Week Highs

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled at three-week highs Monday afternoon, supported by strong demand, a rally for equities and a crude oil supply outage in Libya.

"The strong demand and a rebounding stock market provided support for oil [futures] despite the fact that people are expecting overall weekly crude supply to have increased," said analyst Phil Flynn at Price Futures in Chicago.

"Equities are up and that's helpful for oil and the dollar's gains have been limited, but the main thing is that overall demand is really decent," said Kyle Cooper, an analyst at IAF Advisors in Houston.

On Wall Street, Dow Jones Industrial Average surged nearly 400 points and the S&P 500 index by more than 30 points Monday afternoon. The stock market's correlative trading with oil has been strong this month.

In currency trade, the U.S. dollar traded to a three-session low Monday versus a basket of rival currencies, with the greenback having an inverse relationship with domestic oil prices.

The Energy Information Administration last Thursday showed total products supplied to market for the four weeks ended Feb. 16 averaged 20.6 million bpd, up by 4.3% year-over-year. Crude oil refinery inputs plunged 329,000 bpd during the week ended Feb. 16 to 15.8 million bpd, about 4% higher than the same week in 2017, the data showed.

Analysts are mixed on their expectation for the weekly change in crude oil supply at Cushing, Oklahoma, the delivery location for West Texas Intermediate crude futures on NYMEX.

Cooper linked his estimate for a Cushing crude stock draw to strong demand in the Gulf Coast refining belt, while Flynn said he expected stock builds both at Cushing and overall.

"If you look at the Brent/WTI spread trading at $3.50, you get the idea that Cushing is likely to continue with stock draws," said Cooper.

Overseas, Libya's state-owned oil company on Friday declared a force majeure on exports of oil from the 70,000-bpd el-Feel oilfield that shut down after armed local guards took control of the facility in protest against unpaid wages. Other media reports put the Libyan outage at 90,000 bpd.

In January, the North African nation produced nearly 1.0 million bpd, a recent OPEC report showed. The latest force majeure has affected exports to Europe.

At settlement, NYMEX April WTI crude futures were 36cts higher at $63.91 bbl, inching off an intraday high at $64.24. ICE April Brent crude futures gained 19cts to settle at $67.50 bbl, ending near a $67.90 intraday high, closing at a $3.59 bbl premium to WTI. NYMEX March RBOB futures climbed 1.82cts to a $1.8267 gallon settlement after trading at a $1.8341 intraday high. March ULSD futures gained 1.65cts to settle at $1.9859 gallon, paring an advance to $1.9943.

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