Oil Futures Close Mixed Friday

OLD BRIDGE, N.J. (DTN) -- Oil futures nearest to delivery traded on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled mixed after choppy trade with West Texas Intermediate crude oil reversing higher following Thursday's decline on rumors a downed Syncrude upgrader outage in Canada might be extended, while Brent crude continued down a second day on reports of increased production by Saudi Arabia in June.

WTI crude futures, which declined following Thursday's bearish supply data from the Energy Information Administration, traded as high as $73.42 per barrel (bbl) amid industry chatter that the Syncrude upgrader in Alberta could be offline into August. Although no confirmation was available at press time, the unit was expected to be out through July after a late June power outage caused a transformer to trip. WTI later moved off highs, though still settled up 86 cents per bbl on the day at $73.80, while down 35 cents on the week. On Tuesday, WTI traded at a $75.27 better-than-3-1/2-year high on the spot continuation chart.

"Earlier in the day we heard market chatter that Syncrude was going to be offline into August, but I haven't seen anyone else reporting on it which caused a pop in crude," said William Wilson, commodities broker with Washington, D.C.-based Powerhouse, a commodity hedge and trade advisory.

In the Brent market, trader selling continued with prices off 28 cents per bbl on the day, settling at $77.11, amid media reports that Saudi Arabia had pumped an additional 500,000 barrels per day (bpd) of crude in June. Saudi Arabia is expected to add another 500,000 bpd of output in July, boosting production to offset supply disruptions in Libya, Venezuela, and increasingly Iran, where U.S. sanctions are slowing Iranian exports.

Wilson added that Brent crude futures were likely pressured on bearish market sentiment following the announcement of $34 billion in new U.S. trade tariffs slated to go into effect Friday on Chinese goods imported into the United States.

Traders noted ongoing concerns about a possible U.S. trade war with China as potentially slowing world economic growth and attendant oil demand. Even as an additional $34 billion of U.S. trade tariffs went into effect, the Trump administrations is threatening additional tariffs that could total $500 billion.

On the products side, August RBOB gasoline futures gave back Thursday's gains spurred by a draw in gasoline stocks and strong demand, reversing lower by 2.08 cents to settle at $2.1085 gallon. On the spot chart, RBOB is down 7.06 cents or 3.2% since prior Friday.

NYMEX August ULSD futures also settled down, erasing Thursday's gain on strong demand for distillates, falling 1.03 cents per gallon at settlement to $2.1684. ULSD futures on a spot continuous basis declined 4.09 cents or 1.9% on the week.

On the supply side, Baker Hughes reported today that U.S. oil companies deployed five rigs this week through today, with the U.S. oil rig count at 863, matching June's 38-month high. The rig count is up 100 against the same week in 2017 with 116 rigs deployed year-to-date.

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