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 lower Monday as traders took profits on the first day of a holiday-shortened week following Friday's trading session, which saw West Texas Intermediate (WTI) crude oil trade at a 3-1/2 year high and Brent crude oil at multi-week high just below $80 barrel (bbl).
Late-week news last week that Saudi Arabia was set to lift crude production to a record high near 11.0 million barrels per day (bpd) in July, up from about 10.0 million bpd in May, was amplified after U.S. President Donald Trump said the Saudis agreed to increase output by 2.0 million bpd, which was later walked back by the Trump administration.
The increase in Saudi production follows the recent meetings by the Organization of the Petroleum Exporting Countries (OPEC) and 10 non-OPEC oil producing countries that they would comply with their two-year agreement in reducing output, with involuntary cuts reducing the coalition's production to about 1.0 million bpd below their agreement.
An output freefall in Venezuela is the primary culprit in the lower supply, while output issues have also adversely affected production in Angola, Nigeria and Libya, where a recently reignited civil war has cut exports. As much as 650,000 bpd of export capacity has been effected by fighting in Libya, which compares with May crude production at 955,000 bpd.
There are indications that declining exports from Libya might endure longer than initially thought after the ruling faction in the east created a new company to sell the oil. However, the new entity is not considered legitimate, and buyers are expected to steer clear in doing business with the company out of fear of lawsuits.
The higher sought production also comes as re-imposed U.S. sanctions on Iran threaten exports from the OPEC member, with the Wall Street Journal recently reporting Iranian crude exports dropped from 2.7 million bpd in May to 2.2 million bpd in June. That news comes as U.S. officials have traveled the world, telling allies to end their exports of Iranian crude by Nov. 4.
ICE September Brent crude settled at $77.30, $1.93 bbl less on the day, while the October contract lost $1.88 to settle at $76.98 bbl.
NYMEX August West Texas Intermediate settled 21 cents bbl lower at $73.94 with the September contract ending at $71.62 bbl, down 84 cents.
NYMEX August RBOB futures declined 4.64 cents to $2.1048 gallon, while the September contract was off 4.59 cents to $2.0862 gallon. NYMEX August ULSD futures slumped 5.39 cents to settle at $2.1558 gallon, while September lost 5.32 cents gallon to $2.1630 gallon.
Brian Whary can be reached at firstname.lastname@example.org
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