Oil Futures Close Mixed; Up on Week

CRANBURY, N.J. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange ended the week with gains and the session mixed after profit-taking pared an advance for crude and pressured products following another round of intraday highs last seen in mid-November. West Texas Intermediate and Brent settled at their highest point since Nov. 16, 2018.

The market's upward thrust in February follows evidence that the Organization of the Petroleum Exporting Countries is making deeper production cuts than agreed to in December, and growing optimism for improving global trade as the United States and China inch toward an agreement satisfying U.S. demands for China to change its trade policy.

U.S. President Donald Trump on Friday afternoon said he's ready to extend the March 1 deadline for a trade deal to be completed with China, saying the relationship with China is strong, and "it's more likely a deal will happen."

The United States was set to lift tariffs on $200 billion in Chinese imports from 10% to 25% on March 2 absent a deal, which was expected to be met with retaliation by Beijing, escalating the trade dispute.

The president said he might meet with China's President Xi Jinping in March, a condition Trump set for a deal.

This week's trade talks in Washington were extended for two days.

Bloomberg reports two people were killed in Venezuela on Friday by the army for trying to keep part of the border with Brazil open in an attempt to bring in humanitarian aid. The military in Venezuela remains under the control of Venezuelan President Nicolas Maduro, with Maduro ordering the border with Brazil closed this week. Previously, Maduro blocked humanitarian aid from entering the country from Columbia.

Juan Guaido, the interim president of Venezuela recognized by the United States, Canada, most of Europe, and importantly, most of Latin America, has rallied as many as 20,000 Venezuelans to deliver aid into the country on Saturday, according to reports. Guaido is hoping to convince the military to turn their backs on Maduro, who illegally was sworn in as president in January.

As this showdown nears, U.S. sanctions declared in late January on PDVSA, Venezuela's state-owned oil company, are having an effect. Satellite imagery indicates Venezuela's crude stocks have increased by 2.0 million bbl to a five-year high at 32.8 million bbl since the sanctions were announced, as PDVSA struggles to find buyers willing to risk the wrath of the United States. Amy Myers Jaffee with the Council on Foreign Relations on Thursday noted Venezuela has only 44 million bbl of storage capacity, a low level that could further reduce Venezuela's crude production, which averaged 1.106 million bpd.

NYMEX April WTI futures settled up $0.30 at $57.26 bbl, the first settlement above the 100-day moving average, at $57 this afternoon, since Oct. 17, 2018, a buy signal. On a spot continuous basis, WTI futures are up $1.67 or 3.0% this week, with the March contract having expired on Wednesday.

ICE April Brent crude settled up $0.05 at $67.12 bbl, and on the week gained $0.87 or 1.3%. The May contract held a $0.13 bbl premium to April delivery.

NYMEX March ULSD futures settled down 0.52cts at $2.0311 gallon while up 1.08cts on the week, reversing lower from a $2.0460 three-month spot high after encountering resistance at $2.0462, the 50% retracement point for the fourth quarter downtrend. April ULSD futures settled at a 10 points discount to nearby delivery.

NYMEX March RBOB futures reversed from a $1.6263, 3-1/2 month intraday high on the spot continuous chart after hitting resistance at the $1.6219 extension point for the fourth quarter downtrend, settling down 0.32cts at $1.6112 gallon. On the week, the contract gained 3.83cts or 2.4%. April RBOB futures settled down fractionally at $1.7669 gallon, with the wide calendar spread reflecting upcoming seasonal strength in the gasoline market.

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