Oil Down, Traders Consolidate Gains

OLD BRIDGE, N.J. (DTN) -- New York Mercantile Exchange oil futures and Brent crude on the Intercontinental Exchange settled lower Friday amid light profit taking ahead of the weekend as traders turned focus to U.S. drilling data following Thursday's headline-driven advance spurred by news events unfolding in the Middle East and Monday's opening of the new U.S. embassy in Jerusalem.

This week's much-anticipated decision by U.S. President Donald Trump to withdraw from the 2015 nuclear pact and its potential effect on Iranian oil exports rallied oil futures. Thursday's rocket attacks on Israel from Iranian positions in Syria and the resulting strong Israeli response also buffeted futures prices, with West Texas Intermediate, Brent crude and RBOB futures rallying to 41-month daily spot highs this week, and the ULSD contract reached a 38-month high on the spot continuous chart.

Absent new headlines from the Mideast, market focus has shifted to U.S. drilling rig data from Baker Hughes as well as Monday's slated opening for the new U.S. embassy in Jerusalem from its prior location in Tel Aviv on Israel's West Bank.

"I think we've run up so fast that today (Friday) was probably a consolidation day with traders taking some profits," said Dan Flynn, an energy analyst with Chicago-based The Price Futures Group. "We're going to be playing headlines and tight supplies for now. That's what the markets are going to be looking for."

At Friday's settle, NYMEX June WTI futures settled $0.66 lower at $70.70 bbl, though still posting a $71.89 41-month spot high for the week. ICE Brent crude for July delivery slipped $0.35 to $77.12 bbl, while NYMEX June RBOB futures settled flat, down two points to $2.1888 gallon. The June ULSD contract was down a fractional eight points, settling at $2.2220 gallon.

According to Baker Hughes, the number of active U.S. oil rigs increased for the sixth consecutive week through Friday, up 10 to a fresh 38-month high of 844, 132 more rigs than a year ago. Oil companies deployed 97 rigs year-to-date, with 47 of the activated rigs occurring during the second quarter.

Brian Whary can be reached at brian.whary@dtn.com