Oil Up on Supply Disruptions

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 higher Monday. This due to a 360,000 bpd Syncrude unit in Alberta expected to remain offline longer than expected and amid media reports indicating Libyan oil exports have decreased by half during the first five months of 2018.

Suncor, the majority owner of the Syncrude unit, which went offline June 20, said Monday the unit would likely operate at reduced capacity through early to mid-September, later than the Aug. 1 planned restart date. Two of the three coker units at the site could return to service as originally planned, though a third unit return could be delayed pending a company decision whether to conduct scheduled fall maintenance now given that the unit already is offline.

The Syncrude outage was expected to continue to reduce oil deliveries at Cushing, Oklahoma, the delivery location for the West Texas Intermediate futures contract, where stocks have been drawn down for the last seven straight weeks through June 29 to 27.8 million bpd, the lowest level since December 2014. Working stocks at Cushing are at 35.5% of capacity, according to data from the Energy Information Administration.

Futures prices for NYMEX August West Texas Intermediate crude oil finished higher for a third straight day, settling up 5 cents to $73.85 bbl after choppy range trade between $72.99 bbl and $74.28 bbl.

In the Brent markets, September futures moved $1.08 higher to settle at $78.20 bbl, the highest price since July 4, amid a Reuters report showing exports from Libya declined to 527,000 bpd through the first five months of 2018 from 1.28 million bpd in February. Exports from Libya are expected to continue to decline this year as rival factions engage in civil war and vie for control of oil and port infrastructure assets in the eastern portion of the country.

On the products side, NYMEX August RBOB futures reversed higher from Friday's lower close, rallying 4.0 cents on the day to $2.1485 gallon, with gasoline demand in peak season. The EIA last week reported implied demand for gasoline up 137,000 bpd to a near weekly record high of 9.869 million bpd during the final week of June.

NYMEX August ULSD futures also reversed higher on the day, settling up 2.73 cents at $2.1957 gallon, the highest settlement on the spot chart since the June 29 expiration of the July contract.

Analysts contend distillate supplies could remain tight this year amid rising demand, reported up 514,000 bpd to 4.126 million bpd during the last week of June, according to EIA data.

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