Oil Ends Monday Down on Profit-Taking

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled lower Monday afternoon, reversing from monthly highs traded overnight on overbought market pressure, with additional price pressure exerted upon the market after information provider Genscape reported a supply build at the Cushing depot in Oklahoma.

"Oil came off after Genscape showed a 2.18 million bbl crude stock build at Cushing, which is larger than most people anticipated [for the week-ended March 23], leading people to take profits because it signals Gulf Coast refineries are slow to ramp up runs following the seasonal turnaround," said analyst Phil Flynn at Price Futures.

Last week, the Energy Information Administration reported crude oil stocks at Cushing rose during the week-ended March 16 by 905,000 bbl to 29.423 million bbl. It was the second straight weekly build at Cushing, the delivery location for NYMEX West Texas Intermediate futures, following 11 consecutive weekly draws that began in mid-December.

Oil futures have been underpinned by concern over the security of oil supply, with the geopolitical risk premium in oil prices increasing in March.

"[T]he market today (Monday) took some of the risk premium off the table," said Flynn.

The reduction in the premium occurred despite reports that Saudi Arabia on Sunday intercepted seven ballistic missiles fired by Yemen's Houthi militia. The Houthis have support from Iran, although Iran denies involvement in the fighting in Yemen, which has a border along Saudi Arabia's southwest.

The Saudis and Iran, key oil producers in the Middle East, are fighting a proxy war in Yemen. Last week, Saudi Crown Prince Mohammed bin Salman met with President Donald Trump and reportedly discussed how to challenge Iran more aggressively.

In equities trade, the Dow Jones Industrial Average rallied nearly 670 points or 2.8% as trade tension eased between the United States and China, with the S&P 500 Index up 70 points or 2.7% and the Nasdaq 100 Index gained nearly 250 points or 3.8%. The surge in equities follows a two-day selloff late last week, with the market buying after the steep drop and on comments by U.S. Treasury Secretary Steven Mnuchin comment that U.S. officials are working to avoid a trade war.

NYMEX May WTI crude oil futures settled down 33cts at $65.55 bbl, reversing off a $66.55 two-month high on the spot continuation chart. Intercontinental Exchange May Brent crude also settled up 33cts at $70.12 bbl, reversing off a $71.05 two-month spot high. NYMEX April ULSD futures settled 0.34cts lower at $2.0150 gallon, moving off a six-week spot high of $2.0319. April RBOB futures were 2.32cts lower with a $2.0104 gallon settlement, reversing off a fresh seven-month spot high of $2.0463.

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