CRANBURY, N.J. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Intercontinental Exchange Brent futures ended Thursday's session mixed, with the crude grades softening and oil products rallying, reflecting seasonal refinery maintenance when refiners cut back purchases of crude oil.
While settling down $0.20 at $56.96 per barrel (bbl), West Texas Intermediate futures settled at a fresh 3-1/2-month high on the spot continuous chart, as the April contract began its stint as nearest delivery following the March contract's expiration Wednesday in the contango market.
ICE April Brent settled down $0.01 at $67.07 bbl from Wednesday's 3-1/2-month spot high settlement, with the May contract settling at a $0.12 premium to April delivery. The forward curve moves back into backwardation from May delivery through year's end, a bullish market structure.
Crude prices have rallied in the first quarter following the fourth quarter selloff, with the primary driver for the advance production cuts by the Organization of the Petroleum Exporting Countries that agreed with Russia and nine other non-OPEC oil producers to cut crude output by 1.2 million barrels per day (bpd) during the first half of 2019.
Involuntary production cuts in Libya amid warring armies seeking control of the North African nation, and in Venezuela and Iran because of U.S. sanctions are improving OPEC's compliance with its agreement to reduce production by 811,000 bpd.
Wire reports said satellite imagery shows crude supply in Venezuela reached a five-year high at 32.8 million bbl, as U.S. sanctions choke off buyers. The report indicates inventory increased 2.0 million bbl since the sanctions were announced in late January to push out Venezuelan President Nicolas Maduro. Separately, reports indicate Maduro has ordered Venezuela's border with Brazil closed.
In the United States, crude production continues to ratchet higher, with weekly data released by the Energy Information Administration today showing output reached a 12.0 million bpd record high during the week-ended Feb. 15, catching up with monthly statistics that indicate domestic production reached the 12.0 million bpd high in January. EIA projects U.S. crude production will average 12.4 million bpd this year, driving growth in world oil production that has prompted OPEC to reduce their exports.
U.S. crude exports continue to grow, reaching a record-high 3.607 million bpd during the week profiled, said EIA. Earlier this week, news broke that India's largest oil refinery, Indian Oil Corp., reached an agreement to buy 60,000 bpd of U.S. crude oil from April to May 2020 in a deal valued at $1.5 billion.
Inventories of gasoline and distillate fuel in the United States were both drawn down 1.5 million bbl during the week ended Feb. 15, according to EIA, while total oil product supplied to market increased 1.606 million bpd to 20.72 million bpd. The U.S. refinery run rate was flat during the week at a 16-month 85.9% low.
NYMEX March RBOB futures settled at a fresh 3-1/2-month high $1.6144 gallon, up 1.63 cents, and March ULSD futures jumped to a three-month high settlement at $2.0363 gallon, up 1.8 cents.
Brian L. Milne can be reached at email@example.com
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