NYMEX, ICE Front-Month End Higher

OAKHURST, N.J. (DTN) --- New York Mercantile Exchange nearest delivery crude oil and RBOB futures and the Intercontinental Exchange front-month Brent crude oil contract settled higher Friday afternoon, following a neutral federal weekly oil supply report, while the complex also found support from higher equities markets. The Dow Jones Industrial Average at the time of the oil futures close was on track to settle higher for a third straight session, which hasn't happened in December.

Nearby delivery month NYMEX ULSD futures settled down more than a penny Friday afternoon.

The Energy Information Administration at midmorning reported a 46,000 bbl draw in commercial crude oil supplies in the week-ended Dec. 21, a sharp contrast to the 6.9 million bbl build reported Thursday afternoon by the American Petroleum Institute.

EIA data showed stocks at the key Cushing, Oklahoma, hub increased for a fifth straight week, up 799,000 bbl, yet were down more than 10.0 million bbl from the same week last year.

On the products side, gasoline inventories rose 3.0 million bbl last week, according to EIA, though demand continued higher, while distillate stocks were essentially flat at 119.9 million bbl. Data showed distillate supply edged up just 2,000 bbl in the week profiled and demand for the fuel tumbled over 13%.

NYMEX February West Texas Intermediate crude oil futures settled up 72cts at $45.33 bbl while the February ICE Brent contract, scheduled to expire Monday (12/31) at the close of trade, settled 7cts higher at $52.23 bbl.

January RBOB futures settled up 2.22cts at $1.3262 gallon and the January ULSD contract shed 1.36cts to $1.6647 gallon settlement.

According to EIA data, domestic production added 100,000 bpd last week to match the record 11.7 million bpd. Versus the same week in 2017, production was up 20%.

For the four weeks ended Dec. 21, domestic production averaged 11.650 million bpd, up 19.4% from the same four-weeks in 2017, while cumulative daily average output at 10.832 million bpd was up 16.2% versus a year ago.

The EIA earlier this month forecast U.S. oil production would average a record high 12.1 million bpd in 2019, up 1.2 million bpd or 11% year-on-year.

The short-cycle nature in tight oil production, which can start up or slow down quickly, has confounded oil forecasters as well as the Organization of the Petroleum Exporting Countries, which is set to begin production cuts in a few days on Jan. 1. Earlier this month, Andy Hall, famed oil trader and hedge fund manager nicknamed "God" for the large and successful trades he made on oil, called short-cycle tight oil production the great imponderable in an interview with Bloomberg. Hall said in the past a forecaster could gauge with some certainty future supply levels, but now "everyone is groping" to predict with confidence how supply will perform.

Hall's words rang true after EIA earlier this month projected tight shale oil production in seven regions in the United states would increase 134,000 bpd from this month to 8.166 million bpd in January despite low oil prices. Oil futures tumbled on the report, with the contango in West Texas Intermediate deepening.

Dawn Gallagher can be reached at dawn.gallagher@dtn.com