Oil Futures Continue Slump

OLD BRIDGE, N.J. (DTN) -- Oil futures nearest to delivery traded on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange continued to slump Monday, pressured by technical selling and long liquidation amid record domestic production and uncertainty regarding potential production increase from Organization of Petroleum Exporting Countries and non-member Russia.

The Commodity Futures Trading Commission's Commitment of Traders Report for the week-ended May 29 showed funds reduced upside market risk by 53,294 West Texas Intermediate contracts to 300,987 contracts of market length and have liquidated 130,570 long crude oil positions over the last six weeks.

Energy Information Administration data for the final week of May showed a surprise build in gasoline and distillate inventories, with gasoline up a second straight week.

The agency reported domestic production rose to a record 10.769 million bpd, while Baker Hughes data for the week-ended Friday (6/1) detailed a steady deployment of oil rigs brought that figure to at a better than three-year high.

At the 2:30 PM ET settlement, NYMEX July WTI futures dropped $1.06 to $64.75 bbl, while August WTI futures declined $1.09 bbl to $64.68 bbl.

ICE August Brent crude slid $1.50 to $75.29 bbl settlement and the September Brent contract fell $1.41 to settle at $75.10 bbl.

With record US production and geopolitical uncertainty, traders continue to monitor the wide price spread between WTI and Brent crude futures. Brent has been trading at a substantial premium to WTI, an indication of continued pipeline bottlenecks and limited VLCC crude carrier availability when attempting to export soaring US production from Texas and Oklahoma to world oil markets. The spread settled Monday at $10.42 bbl after peaking at more than $11 bbl Friday (6/1).

NYMEX July RBOB futures dropped 2.10 cents to $2.1224 gallon settlement, while July ULSD futures fell 2.38 cents to settle at $2.1525 gallon.

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