WTI Crude Slips in Front of $70

Brian L Milne
By  Brian L. Milne , DTN Refined Fuels Editor

CRANBURY, N.J. (DTN) -- The May West Texas Intermediate crude futures contract on the New York Mercantile Exchange reversed down from a better-than-three-year spot high as it approached $70 per barrel (bbl) to settle with a modest loss, while the May RBOB and ULSD contracts settled at fresh highs on their respective spot continuation charts alongside a fresh multiyear high for Brent crude on the Intercontinental Exchange.

Oil futures rallied sharply overnight and into early trading Thursday on bullish data suggesting an end to a protracted global oil surplus, with the advance slowed by profit taking as upside resistance was confronted.

NYMEX May WTI futures spiked to $69.56 bbl, the highest trade on the spot continuous chart since late November 2014, but faded from the high in front of $70 bbl with resistance again found at $70.44 bbl. June WTI futures settled down 14cts at $68.33 bbl, a contango position ahead of Friday afternoon's expiration of the May contract. The calendar spreads one year out narrowed their discount to nearest delivery on the session in the backwardated market.

The U.S. dollar strengthened to a nine-session high in index trading Thursday, which has an inverse relationship with WTI futures, although the greenback has largely moved in a narrow trade range near a three-year low.

ICE June Brent settled at a fresh better-than three-year, four-month spot high of $73.78 bbl Thursday, although pared an advance to a $74.75 multiyear high on profit taking. Brent crude has settled higher for three consecutive sessions, finding support on concern over oil supply security in Libya as a potential power struggle emerges after Khalifa Haftar was reported as having a stroke. Haftar heads the Libyan National Army which controls eastern Libya.

Profit taking also comes in front of the Joint Ministerial Monitoring Committee that oversees compliance with production cuts by the Organization of the Petroleum Exporting Countries and 10 non-OPEC oil producing countries, which meets Friday in Saudi Arabia.

OPEC and their non-OPEC partners agreed to cut their output by nearly 1.8 million barrels per day (bpd) from their October 2016 production rates, with the two-year agreement running through the end of 2018.

OPEC, in their Monthly Oil Market Report issued on April 12, said their crude production fell to an 11-month low of 31.958 million bpd in March. Libyan crude production averaged at a 968,000 bpd three-month low in March.

NYMEX May RBOB futures gained 0.91 cent with a $2.0774 gallon settlement, the highest settlement since the end of August 2017, although faded from a $2.0928 gallon high.

U.S. gasoline demand reached a record high of 9.857 million bpd during the second week of April, while up 298,000 bpd, or 3.4%, in 2018 through April 13 against the comparable year-ago period at 9.145 million bpd, according to data from the Energy Information Administration.

EIA reports forward supply cover for distillate fuels fell 1.5 days during the week-ended April 13 to a 29.9-day better-than-three-year low.

NYMEX May ULSD futures settled up 1.83 cents at $2.1094 gallon, the highest settlement on the spot chart since Jan. 26.

Brian L. Milne can be reached at brian.milne@dtn.com

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Brian Milne