OLD BRIDGE, N.J. (DTN) -- Oil futures nearest to delivery traded on the New York Mercantile Exchange (NYMEX) and Brent crude on the Intercontinental Exchange (ICE) were lower early Friday as traders took profits following Thursday's Venezuelan-driven rally and ahead of Friday's G7 meeting in Quebec.
Contract values spiked Thursday to their highest levels in a week after media reports indicated exports of crude and products from Venezuela could be curtailed by 53.7% or 805,000 barrels per day (bpd) in June as a result of PDVSA export asset seizures in the Caribbean by Conoco Phillips. As the struggling state-owned oil company attempts to redirect tanker shipments from its own ports, analysts expect delays to mount as a result of limited loading capacity.
Traders seized profits early Friday amid building concern that the G7 meeting could yield increased tariffs between G7 member countries, and its potential effect on reducing global economic growth, which many strongly correlate with international crude oil values.
"I think today's trading action is a bit of profit-taking following yesterday's price run up," said Andy Lipow, president of Houston-based Lipow Associates. "People will also be looking at Friday's G7 meeting to see if we get increased tariffs among a number of countries. We also saw some data overnight showing a drop in Chinese demand, which could be pressuring the market a bit."
The United States faces criticism over trade policies from the United Kingdom, Germany, France, Japan, Italy and Canada.
Near the 9 a.m. ET open, NYMEX July West Texas Intermediate (WTI) futures were off 14 cents to $65.81 barrel (bbl), after trading at a $64.22 eight-week low this week, while the August contract fell 13 cents to $65.76 bbl.
ICE August Brent was down 9 cents at $76.97 bbl amid uncertainty regarding current and future Venezuelan and Iranian crude production, while September contracts dipped 32 cents to $76.66 bbl.
Following Wednesday's eight-week lows, NYMEX July RBOB was little changed at $2.1158 gallon, while the July ULSD contract fell fractionally to $2.1780 gallon.
The early decline comes ahead of the afternoon release of weekly rig data from Baker Hughes, which last showed the U.S. crude rig count at a 38-month high at 861. The rig count has increased in eight of the past nine weeks, auguring higher crude output in the United States.
On Wednesday, the Energy Information Administration (EIA) reported U.S. crude production averaged 10.8 million bpd during the week-ended June 1, a fresh record high.
The stark difference between record U.S. crude production and reduced exports from the Organization of the Petroleum Exporting Countries (OPEC) and Russia amid an ongoing agreement to reduce output inflamed by the collapse in OPEC-member Venezuela has widened the spread between Brent and WTI to a 40-month Brent premium. On Thursday, Brent, the international crude price marker, settled at an $11.37 bbl premium to WTI.
Brian Whary can be reached at firstname.lastname@example.org
© Copyright 2018 DTN/The Progressive Farmer. All rights reserved.