Oil Settles Shallowly Mixed Monday

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

CRANBURY, N.J. (DTN) -- New York Mercantile Exchange nearest delivered oil futures and Intercontinental Exchange Brent crude futures settled a lightly traded session shallowly mixed following non-directional trade on the last day of 2018, with West Texas Intermediate futures down 20.5% this year. Nymex January ULSD futures expired up on the session and the January RBOB contract rolled off the board 25 points down.

In monthly data released Monday, the Energy Information Administration reported U.S. crude production averaged 11.537 million barrels per day (bpd) in October, 377,000 bpd or 3.4% above what EIA’s weekly data showed. The rapid growth in U.S. oil production in 2018 has been the critical dynamic upending production policy by the Organization of the Petroleum Exporting Countries, while EIA has underestimated the domestic growth rate in its weekly data in August and September as well as October.

OPEC’s latest production policy that is joined by Russia and nine other non-OPEC oil producers takes effect Tuesday (1/1), with OPEC+ to cut 1.2 million bpd through the first half of 2019. OPEC accounts for 800,000 bpd of the reduction in output with non-OPEC producers aligned with OPEC to cut 400,000 bpd of their production. Russia accounts for 230,000 bpd of the non-OPEC cut.

Monday is Qatar’s last day with OPEC, with one of the cartel’s oldest members announcing its withdrawal from OPEC earlier this month. OPEC will now have 14 country members. Russian Energy Minister Alexander Novak recently poured cold water over the possibility that Russia would seek a more enduring role with OPEC.

At settlement, Nymex February WTI futures were up $0.08 at $45.41 barrels (bbl), having settled at a $42.53 bbl 1-1/2 year low on the spot continuous chart last week. On the year, WTI futures erased $15.01 or 20.5% of its value.

ICE March Brent futures settled down $0.59 at $53.80 bbl, with Brent down $13.07 or 15.8% on a spot continuous basis in 2018. February Brent futures expired Friday (12/28) at $52.20 bbl, with Brent settling at a $50.47 bbl 16-month spot low last week.

Nymex January ULSD futures expired up 1.61 cents at $1.6808 gallon, with the February contract nearing reconciliation with January, up 1.9cts at $1.6794 gallon at settlement. ULSD futures are down 39.47 cents or 16.8% in 2018, plumbing a 16-month spot low last week at $1.6622 gallon.

Nymex January RBOB futures expired at $1.3237 gallon after trading last week at a $1.2488 gallon 34-month low on the spot continuous chart. February RBOB futures settled at a 2.16 cents discount to January at $1.3021 gallon. RBOB futures are down 47.55 cents or 22.6% in 2018.

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

(CZ)

Brian Milne