WTI Futures Reverse Down

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures are lower across the board in afterhours trade Tuesday afternoon following a mixed settlement. West Texas Intermediate is lower on technical pressure and ahead of U.S. oil supply statistics for the week-ended March 23.

"WTI is down after the spot contract failed to take out old highs of $66.66 posted on Jan. 25, which brought technical selling," said Tom Bentz, vice president for energy derivatives at ABN AMRO. "We tried yesterday (Monday) and today (Tuesday) to take that high out but failed, and now we see profit-taking and expectations for a crude production increase."

As of the week-ended March 16, domestic crude production had risen for the fifth straight week to a record high of 10.407 million bpd while 1.278 million bpd higher than a year ago.

While an increase in domestic crude production for the week-ended March 23 is expected, a survey earlier today estimated a U.S. crude stock drawdown of 1.5 million bbl during the week-ended March 23. Crude stocks at Cushing, Oklahoma, the delivery location for NYMEX WTI futures, are seen down 500,000 bbl.

U.S. gasoline supplies are expected to have declined by 2.25 million bbl and distillate fuel stocks to have been drawn down by 2.75 million bbl.

The American Petroleum Institute will release its oil report at 4:30 PM ET, while the Energy Information Administration's report is due out at 10:30 AM ET Wednesday.

"We are seeing a selloff in the stock market, which may have influenced oil futures trading," added Bentz, echoing other analysts.

Late afternoon after Monday's rally, the Dow Jones Industrial Average was down more than 300 points, the S&P 500 Index lost nearly 45 points and the Nasdaq 100 Index dropped more than 200 points on risk-on trade. The dollar index firmed after trading at a fresh six-week low.

Earlier, oil futures were supported by concern that rising tension in the Middle East could lead to oil supply disruptions or curtail exports. Saudi Arabia this past weekend intercepted ballistic missiles fired by Houthi militia in Yemen. The Houthis are backed by Iran, with Tehran denying involvement.

NYMEX May WTI crude oil futures settled down 63cts at $65.25 bbl, holding below Monday's $66.55 two-month spot high. ICE May Brent crude was little changed at $70.11 bbl ahead of the May contract's expiration Thursday afternoon. June Brent settled at a 65cts discount to the May contract in the backwardated market.

NYMEX April ULSD futures settled 0.74cts higher at $2.0224 gallon, paring gains after rallying to a $2.0460 two-month spot high on the spot continuation chart, with May delivery ending at a slight premium to April. April RBOB futures settled 0.31cts higher at $2.0135 gallon, with, with the May contract settling at a 0.75cts premium to April futures.

The April products contracts expire at Thursday's close.

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