Oil Higher in Wednesday Trade

NEW YORK (DTN) -- New York Mercantile Exchange (NYMEX) spot-month oil futures moved higher Wednesday morning, boosted by slightly higher equities and a report showing oil production by members of the Organization of Petroleum Exporting Countries (OPEC) fell 77,000 barrels per day (bpd) to 32.19 in February.

The three stock indices, Dow Jones Industrial Average S&P 500 and Nasdaq 100, are all advancing slightly in the premarket after declining a day earlier, while the U.S. dollar index was little changed.

The Monthly Oil Market Report for March issued Wednesday morning showed OPEC NGLs production is now expected to grow by 180,000 bpd in 2018 following 170,000 bpd in 2017. Based on secondary sources, OPEC crude production fell 77,000 bpd in February 2018, averaging 32.19 million bpd.

However, the OPEC report was not bullish in general as it showed non-OPEC oil supply for 2018 is revised 280,000 bpd higher from the month prior forecast, representing year-on-year growth of 1.66 million bpd to 59.53 million bpd total supply. In 2017, non-OPEC supply grew at an 870,000 bpd year-on-year rate, with U.S production revised up 70,000 bpd.

The report said U.S. liquids supply forecast for 2018 was revised up 160,000 bpd to show annual growth of 1.46 million bpd year-on-year on the back of higher than expected output of crude oil by 110,000 bpd, mainly from the major shale plays.

Oil demand growth for 2018 is now forecasted at 1.60 million bpd, marginally higher than February's projections, with total demand pegged at 98.63 million bpd, OPEC said. The reported highlighted the strong U.S. economy, but also flagged potential problems such as rising federal debt and protectionist policies.

Meantime, the market now awaits for weekly data on U.S. commercial petroleum supply. On Tuesday, the American Petroleum Institute reported a 1.16 million barrel (bbl) build in crude supply during the week ended March 9, above expectations for a build of 750,000 bbl, while crude stocks at Cushing hub in Oklahoma posted a 156,000 bbl decline versus a 25,000 bbl expected gain.

On products, the trade group reported gasoline inventories fell 1.26 million bbl and a stock draw of 4.26 million bbl for middle distillates. The market expected a 1.75 million bbl gasoline stock decline and a 3.0 million bbl stock draw for distillates.

At 9:15 a.m. ET, NYMEX April West Texas Intermediate crude oil futures were 35 cents higher at $61.06 bbl, while ICE May Brent gained 21 cents to $64.85 bbl. NYMEX April ULSD futures edged 0.67 cents higher at $1.8806 gallon while April RBOB futures climbed 1.25 cents to $1.8988 gallon.

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