Oil End the Day Mixed

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) settled mixed Monday after weekend reports indicated Saudi Arabia and Russia are boosting oil output ahead of a meeting of Organization of the Petroleum Exporting Countries (OPEC) in Vienna later this month that traders said would mitigate, to a limited degree, supply reductions from Venezuela.

Futures prices rallied to one-week highs late last week, as media reports suggested Venezuela's oil exports could be curtailed by 53.7% or 805,000 barrels per day (bpd) in June as a result of ConocoPhillips seizure of PDVSA export assets in the Caribbean. As the struggling state-owned oil company and OPEC member attempts to redirect tanker shipments from its own ports, analysts expect delays to mount as a result of limited loading capacity.

Weekend media reports indicated OPEC member Saudi Arabia had agreed to boost output by 100,000 bpd to 10.0 million bpd, while non-OPEC Russia revealed its output increased by 150,000 bpd to 11.1 million bpd since the beginning of June.

On June 22, OPEC will meet at which time it will review its agreement to cut production alongside 10 non-OPEC oil producers including Russia by 1.8 million bpd. The meeting comes as Venezuela's oil sector is collapsing after years of mismanagement, while U.S. imposed sanctions threaten Iranian oil exports.

The August and September Brent crude contracts, the international price marker, both settled unchanged at $76.46 barrel (bbl) and 76.19 bbl, respectively, in trading on ICE.

NYMEX July and August West Texas Intermediate futures settled 36 cents bbl higher to $66.10 bbl and $66.03 bbl, respectively.

While U.S. crude edged higher, oil products settled lower following bearish weekly data released last week showing supply builds amid a plunge in demand. The drop in gasoline demand came during the week that included the Memorial Day holiday, the kickoff to the U.S. driving season, although some analysts suggest the holiday obscured the data.

The Energy Information Administration (EIA) reported implied demand for gasoline plunged by 713,000 bpd to 8.967 million bpd—the lowest weekly demand rate since late February, during the week-ended June 1. Gasoline supply increased for a third consecutive week through June 1, up 7.0 million bbl over the period to a 239.0 million bbl 10-week high.

Both the July and August RBOB contracts fell 1.04 cents to settle at $2.1049 and $2.0931 gallon, respectively. July ULSD fell 0.36 cent to $2.1607 gallon, while the August contract slipped 0.27 cent to $2.1648 gallon at settlement.

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