Oil Futures Settle Higher Thursday

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled higher Thursday afternoon as equities rallied, the U.S. dollar index eased and the number of working oil rigs in the United States declined this week.

"Oil futures have shaken off the early weakness and now reflect strong demand in the United States and China, and the stock market rebound as fears about a trade war have gone away," said analyst Phil Flynn at Price Futures. "People are also going for the weekend and nobody wants to be short, so we saw some short-covering."

The Dow Jones Industrial Average closed over 1%, after being up more than 400 points, while S&P 500 Index rose nearly 36 points. The U.S. dollar posted a fractional increase but reversed gears off a one-week high.

The number of active U.S. rigs drilling for oil dropped by seven this week to 797, the second decline in March, according to Baker Hughes. That partly offset's data from the Energy Information Administration showing crude production rose last week by 26,000 barrels per day (bpd) to a 10.433 million bpd fresh record high, with domestic output up 941,000 bpd since the first week of 2018.

EIA also on Wednesday detailed a 1.6 million barrel (bbl) build in crude inventory nationwide, with the increase on a 1.8 million bbl build in stockpiles at the Cushing depot in Oklahoma, the delivery location for West Texas Intermediate futures.

Refinery runs rose 1.7% to 91.7% of operable capacity, with crude inputs up 410,000 bpd. Gasoline demand has averaged 9.068 million bpd this year through March 23, up 323,000 bpd or 3.7% versus the comparable year-ago period and exports of the fuel has also been strong.

Concerns remain over the ongoing tension between Saudi Arabia and Iran, while optimism abounds that the attempt to convince members of the Organization of the Petroleum Exporting Countries and non-OPEC producers to extend output cuts through 2019 will be successful.

NYMEX May WTI crude settled down 56 cents at $64.94 bbl, up 94 cents for the week. The May Brent crude oil contract on the Intercontinental Exchange expired 74 cents higher at $70.27 bbl, and 18 cents lower for the week.

NYMEX April ULSD futures went off the board 1.36 cents higher at $2.0284 gallon, and the May contract settled up 0.71 cent at $2.0210. The April RBOB futures contract posted a 0.63-cent advance to $2.0179 gallon on expiration, and May futures settled up a fraction at $2.0206 gallon.

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