Oil Futures Settle Lower Monday

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled lower on the back of a selloff in the equities markets and on signs of higher domestic crude oil production, but the downside was curbed by geopolitical tensions and expectations for weekly oil stock draws for the week-ended March 16.

"Oil was pressured by the stock market's weakness, which was led down by Facebook losses," said analyst Phil Flynn at Price Futures.

Wall Street was led down by the technology sector selling, with the Nasdaq 100 dropping more than 150 points or 2.2% late afternoon. Dow Jones Industrial Average plummeted more than 325 points while the S&P 500 Index declined nearly 40 points.

The equities selloff followed scrutiny of social network firm Facebook for failing to protect its users' data from being used by Cambridge Analytica for political purposes. Facebook shares fell by about 7% and the company faces regulatory backlash both in the United States and the United Kingdom.

The selloff in equities follows concern over U.S. crude oil production, which reached a record high of nearly 10.4 million barrels per day (bpd) in early March according to the Energy Information Administration. Growth in domestic production is expected to continue, with Baker Hughes on Friday reporting a four-rig increase in the number of active oil rigs in the United States for last week, with 800 oil rigs in operation as of Friday, up 53 rigs so far this year.

On the bullish side, Flynn estimated data for the week-ended March 16 would show stock draws of 2.0 million barrels (bbl) for U.S. crude, 3.0 million bbl for gasoline and 4.0 million bbl for distillates. Data collection firm Genscape also reported today that crude oil stocks at the Cushing supply hub in Oklahoma were drawn down last week.

Globally, the market is keeping close watch on a planned meeting this week between President Donald Trump and Saudi Arabian Crown Prince Mohammed bin Salman. Salman said his kingdom would develop nuclear weapons if Iran did, ratcheting up geopolitical risk in the oil-rich Middle East.

Iran, which endured three years of sanctions from the United States as it pursued a nuclear capability, won sanctions relief during the Obama administration. However, Trump has been hostile to the Iran nuclear accord reached by the U.S. and Europe with Tehran, and has threatened to decertify the agreement.

Salman's visit could ratchet up the rhetoric over the Iran accord, with the potential to provide news headlines impactful on oil prices, said analysts.

NYMEX April West Texas Intermediate crude oil futures settled 28 cents lower at $62.06 bbl ahead of expiration Tuesday, while the May contract was down 28 cents at $62.13 bbl. ICE May Brent crude oil settled 16 cents lower at $66.05 bbl, trading at a $3.99 bbl near three-week high premium to WTI.

NYMEX April RBOB futures tumbled 2.10 cents to $1.9249 gallon at settlement and NYMEX April ULSD futures eased 0.48 cent to $1.9070 gallon, reversing off a near three-week spot high of $1.9242 gallon.

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