Oil Futures Mixed on Thursday

WASHINGTON, D.C. (DTN) -- New York Mercantile Exchange nearest delivered oil futures and Intercontinental Exchange Brent futures moved mixed Thursday morning ahead of the afternoon contract expirations for April Brent, March ULSD and RBOB futures, while broadly supported by Wednesday's bullish supply report from the Energy Information Administration and continued price-boosting policy of Organization of the Petroleum Exporting Countries production cuts.

In midmorning trading, the Nymex West Texas Intermediate April contract edged $0.41 higher to near $57.35 while ICE Brent April contract traded $0.37 down at $66.02 barrel (bbl), with the May Brent contract trading at a $0.35 premium to the expiring April contract.

Nymex ULSD March futures were up $0.0100 at $2.0316 gallon, with April delivery trading at $0.0046 discount to the March contract. Nymex RBOB March futures traded $0.0110 higher at $1.6450 gallon, a better than 3-1/2 month high on the spot continuous chart, with April RBOB futures trading at a roughly 12-cent premium to the expiring March contract. The large April premium reflects the seasonal uptrend for gasoline as refiners begin transitioning to summer grade gasoline specifications that need to be at retail outlets by June.

While supported by OPEC production cuts and bullish weekly supply data for the United States, the Brent contract was encountering selling following bearish economic data from China released overnight. The China Federation of Logistics and Purchasing Manufacturing Managers Index remained in contraction zone for the third consecutive month, dipping by more than expected to 49.2 with the reading below 50 indicating contraction.

Still, oil futures are trading near February highs as OPEC carries out its policy of steep production cuts. Saudi Arabian Energy Minister Khalid al-Falih on Wednesday dismissed an early-week calls from U.S. President Donald Trump urging OPEC to relax production cuts. The energy minister reaffirmed the kingdoms plans to produce 9.8 million barrels per day (bpd) in March, 500,000 bpd below its allowed quota, and suggested the six-month OPEC+ agreement might be extended through the end of 2019.

Oil prices have gained almost 20% since the start of the OPEC+ agreement on Jan. 1, with parties to the arrangement agreeing to cut 1.2 million bpd in crude production. Involuntary losses in output from Venezuela, Libya and Iran have further reduced available global oil supply, with the three OPEC countries exempt from the OPEC+ production agreement.

Lower crude exports from Venezuela and Saudi Arabia are also a factor in the steep decline in U.S. crude imports in the week ended Feb. 22 reported by Energy Information Agency Wednesday. According to EIA data, U.S. crude imports plunged 21% from the previously reported week to 5.917 million bpd, a 23-year low. EIA also showed the United States became a net-exporter of oil during the week ended Feb. 22 for only the second week on record.

Government data also showed an unexpected 8.6 million bbl drop in the commercial crude inventories to a 445.9 million bbl, four week low, amid the drop in imports and despite domestic crude production hitting a fresh high of 12.1 million bpd last week.

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