Oil is Mixed in Thursday Trade

Brian L Milne
By  Brian L. Milne , DTN Refined Fuels Editor

CRANBURY, N.J. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange were mixed early Thursday, with West Texas Intermediate, Brent and ULSD futures higher while the gasoline contract is down, trading at a fresh eight-month low overnight at $1.7957 gallon.

Earlier Thursday, a committee overseeing a production arrangement between the Organization of the Petroleum Exporting Countries and 10 non-OPEC oil producers led by Russia concluded market fundamentals "showed a very comfortable supply level relative to demand."

"The committee however expressed concerns about rising inventories in recent weeks and also noted looming macro-economic uncertainties, which may require changing course," said the Joint Ministerial Monitoring Committee in a news release Thursday morning, and will consider options "to prevent reemergence of a market imbalance."

Previously, Saudi Arabia had worried about re-inflating a global supply glut after the United States and other consuming nations including India expressed concern over high oil prices, and sought more production. Global oil demand is seen at a record high of about 100 million barrels per day (bpd) during the current quarter, but then falls off in the first quarter. Oil prices had rallied in late September, early October on worries the high consumption rate and lost Iranian oil supply to global oil markets would spike oil prices further, with some in the industry seeing Brent reaching $100 barrels (bbl) late this year or in early 2019.

Those concerns have washed away, with the Saudis changing track in an effort to move past a crisis that threatens the kingdom's global standing following revelation of the death of a Saudi dissident and journalist at its consulate in Istanbul, Turkey, on Oct. 2.

Saudi Arabia's Foreign Ministry issued a statement early Thursday that the murder of Jamal Khashoggi, a critic of Crown Prince Mohammed bin Salman, was premediated following a joint Saudi-Turkish investigation. The statement follows what U.S. President Donald Trump said earlier this week was the "worst cover up ever" after the Saudis changed their story about what happened to their citizen several times, including that Khashoggi died in a fistfight at the consulate. The crown price on Wednesday called the murder a "hideous incident and totally unjustifiable."

Saudi Arabian Energy Minister Khalid al Falih this week said Saudi production reached 10.7 million bpd, up from 10.5 million bpd in September, and will continue to lift output to 11.0 million bpd. The oil minister also urged other world producers to produce all out to ensure enough supply, which comes as U.S. sanctions on Iranian oil exports are set to take effect in less than two weeks. Reuters reported China's state-owned refiners Sinopec Group and China National Petroleum Corp have not purchased Iranian oil for November for fear of running afoul of U.S. sanctions.

Near 10 a.m. ET, Nymex December WTI futures were up $0.60 near $67.45 bbl and ICE December Brent gained $0.50 to near $76.65. Nymex ULSD futures were up about 1.75 cents near $2.2695 gallon, and the RBOB contract slid 0.65 cents to near $1.8165 gallon.

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

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Brian Milne