Oil Little Changed in Friday Trade

CRANBURY, N.J. (DTN) -- New York Mercantile Exchange nearest delivered oil futures and Brent crude on the Intercontinental Exchange were little changed following Thursday's price decline on profit taking amid an overbought market sparked, in part, by increased oil production by the Organization of the Petroleum Exporting Countries and non-OPEC oil producers aligned with the cartel in a two-year production agreement.

OPEC and their non-OPEC contingent have increased oil production by more than their 1.0 million barrels per day (bpd) target set out in June, reports Platts, as crude prices rallied on worry over tightening global oil supply amid U.S. sanctions on Iranian oil exports and unabated decline in Venezuela's crude production along with supply losses by other producers. Libya, where production rates are volatile amid warring militant factions, is responsible for some of the additional oil flow. OPEC will provide September crude production rates for its 15 members on Oct. 11.

The late week pullback, with West Texas Intermediate and Brent still up on the week, also follows Wednesday's supply report from the Energy Information Administration showing an 8.0 million barrels (bbl) build in commercial crude stocks in the United States with crude production at a record high 11.1 million bpd during the final week of September.

WTI, Brent and ULSD futures spiked to four-year highs on their spot continuous charts on Wednesday, with the RBOB contract at a better-than four-week high on concern U.S. sanctions on Iranian oil exports that take effect Nov. 4 will limit oil availability later this year as demand is seen at a record high 100.3 million bpd in the current fourth quarter.

Iran's oil exports are down 800,000 bpd from June to 1.5 million bpd, and are seen declining more as the U.S. set November deadline for companies to reduce their oil purchases from Iran takes effect. The Financial Times is reporting companies in the European Union are ending their business relationships with Iran because of the U.S. sanctions and despite EU countries attempts to maintain a relationship with Tehran. EU countries remain in the 2015 Iranian nuclear accord that the United States pulled out of in May.

Nymex November WTI futures were up $0.45 near $74.75 bbl at 10 a.m. ET. ICE December Brent was up $0.25 near $84.75 bbl, holding a roughly $10 bbl premium to WTI, as the arbitrage between the U.S. grade and international benchmark widens on worry over global oil supply availability.

Nymex November ULSD futures were up 0.35 cents near $2.4035 gallon and November RBOB futures were down 0.35 cents near $2.0970 gallon.

Brian L. Milne can be reached at brian.milne@dtn.com

(BAS)

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