WASHINGTON, D.C. (DTN) -- New York Mercantile Exchange oil futures nearest delivery and Intercontinental Exchange Brent futures settled mixed, with the West Texas Intermediate, Brent and ULSD contracts settling at three-week highs on their spot continuation charts, while RBOB futures reversed down amid consolidation.
WTI and Brent futures maintained their short-term uptrend in a longer-term downtrend during the first session of the week, bolstered by a Wall Street Journal (WSJ) report late morning Monday that Saudi Arabia wants to cut its crude exports to 7.1 million barrels per day (bpd) by the end of January, down from more than 7.9 million bpd in November. WSJ indicates the Saudis need global oil prices at $80 a barrel (bbl) to fund its budget, which includes efforts to stimulate its sagging economy.
Reports also cite a United Arab Emirates official indicating the Organization of the Petroleum Exporting Countries might meet again ahead of its April biannual meeting to discuss another production cut. In December, OPEC, Russia, and nine non-OPEC oil producers agreed to reduce production by 1.2 million bpd for six months, which took effect Jan. 1.
Oil futures rallied in early trade as delegates from the United States met in Beijing with their counterparts Monday for a two-day meeting between mid-level officials, resuming face-to-face negotiations in an effort to resolve their trade dispute. Senior officials from both countries are scheduled to meet later this month. Monday was the first meeting between the two countries since Dec. 1 when U.S. President Donald Trump and Chinese President Xi Jinping met in Argentina and agreed to a 90-day truce in their trade dispute.
The meeting raised cautious hope that the world's two largest economies would avoid an escalation in their trade disagreement that has already led to a string of tariffs on each country's imports, and has slowed growth in China. China's manufacturing sector contracted in December. While ending higher, crude futures backed off intraday highs, with February WTI futures trading in front of psychological resistance at $50 bbl with a $49.79 intraday high. A move above $50 bbl is seen triggering buy orders and extending the short-term uptrend.
Nymex February WTI futures settled up $0.56 at $48.52 bbl, with ICE March Brent ending $0.27 higher at $57.33 bbl. NYMEX February ULSD futures settled with a 0.92 cents gain at $1.7784 gallon, while February RBOB futures ended down 0.70 cents at $1.3408 gallon.
WTI futures were also lent upside support from a weaker U.S. dollar, which slid to a 2-1/2 month low in index trading this afternoon despite Friday's blockbuster employment report showing 312,000 jobs were created in December and higher wages. Restraining the currency's strength were comments by Federal Reserve Chairman Jerome Powell on Friday that the central bank was not on a "pre-set" course in raising interest rates in 2019, easing market anxiety following Powell's ham-fisted news conference in December that suggested the Fed was ignoring the fourth quarter selloff in equities and commodities.
Equities were set to end the session with gains although, like oil futures, backed off early highs. The Dow Jones Industrial Average was up more than 150 points in late trading, with the S&P 500 Index gaining 1%.Brian Milne can be reached at firstname.lastname@example.org
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