Oil Trades in Narrow Range Thursday

WASHINGTON, D.C. (DTN) -- Nearest delivered oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange bobbed on either side of Wednesday's settlement values Thursday morning, holding near 3-1/2 month highs, while markets await government supply data to be released by the Energy Information Agency 11 AM ET.

In midmorning trade, Nymex WTI April futures shifted $0.21 lower at $56.95 barrel (bbl), ICE April Brent futures traded down $0.09 at $66.99 bbl with the ULSD March contract gaining $0.43 at $2.0226 gallon. Nymex RBOB March delivery traded 0.73cts up at $1.6054.

In a statement released Wednesday Nigerian President Muhammadu Buhari pledged to reduce oil output in an effort to secure higher prices after Saudi Arabia called on the North African nation to adhere to its commitment on production cuts. Organization of the Petroleum Exporting Countries reported Nigeria produced 107,000 barrels per day (bpd) above its 1.685 million bpd quota in January.

According to the president's statement, production cuts had been difficult for Nigeria due to its peculiar circumstances of a large population, a huge expanse of land and underdevelopment, adding, "I wish we [could] produce more." Nigeria is Africa's largest crude oil producer with capacity of 3.0 million bpd at its record high in 2011, and has been a member of OPEC since 1971.

Saudi Arabia continues to prod members to adhere to an agreement cutting 1.2 million bpd by OPEC and other producers, as Russia is currently out of compliance with its quota of 11.191 million bpd. Saudi Energy Minister Khalid al-Falih said on Wednesday he hoped the oil market would be balanced by April and that there would be no gap in supplies due to U.S. sanctions on OPEC members Iran and Venezuela.

Despite Saudi Arabia's efforts to balance the market, surging U.S. crude production and high inventory continues to cap oil futures' upside. EIA data shows commercial crude stocks in the United States having increased for four consecutive weeks through Feb. 8 to a 15-month high at 450.8 million bbl, and 28.7 million bbl or 6.8% above the comparable year-ago period.

American Petroleum Institute published weekly supply data Wednesday afternoon, showing a smaller-than-expected build in commercial crude supplies during the week-ended Feb. 15 while draws in gasoline and distillate supplies were less-than-anticipated.

API reported crude supplies increased 1.255 million bbl during the week reviewed, with distillate stocks drawn down 758,000 bbl and gasoline inventory declined 1.551 million bbl.

Liubov Georges can be reached at liubov.georges@dtn.com

(BAS)