CRANBURY, N.J. (DTN) -- New York Mercantile Exchange nearest delivered oil futures and Brent crude on the Intercontinental Exchange are sharply higher in early trading Monday, reversing Friday’s losses on reduced exports from Saudi Arabia while the gasoline market surges on seasonal features, including refinery downtime.
In midmorning trading Monday, Nymex April West Texas Intermediate futures were up $0.70 near $56.75 barrels (bbl), with ICE May Brent futures $0.85 higher near $66.70 bbl. Nymex April ULSD futures were up 0.75 cents near $2.0075 gallon, while April RBOB futures advanced 3.0 cents to near $1.8320 gallon after rallying to a $1.8350 4-1/2 month high on the spot continuous chart.
Saudi Arabia plans to keep crude production well below 10 million barrels per day (bpd) in an effort to reduce excess global oil inventory, a Saudi official told Reuters on Sunday, which compares with a 10.311 million bpd allotted quota under a production agreement between the Organization of the Petroleum Exporting Countries, Russia and nine other non-OPEC oil producers.
Previously, Saudi Energy Minister Khalid al-Falih indicated the kingdom’s output would average 9.8 million bpd in March, a production rate it plans for April.
According to the report, Saudi crude production averaged 10.136 million bpd in February, down 104,000 bpd from January. Saudi crude production reached a record high of 11.016 million bpd in November 2018.
The official said the Saudis will keep exports below 7 million bpd, adding state-owned oil company Saudi Aramco has turned down 635,000 bpd in customer requests for April deliveries.
Oil futures are also finding support from Baker Hughes drilling report released Friday afternoon showing a third weekly decline in the U.S. oil rig count to an 834 10-month low. Nine rigs were taken out of service last week, with the year-to-date decline through Friday at 51.
Higher oil futures come ahead of monthly reports from the Energy Information Administration, International Energy Agency and OPEC this week. EIA will release its Short-term Energy Outlook near noon Washington time Tuesday, with OPEC its Monthly Oil Market Report Thursday morning. The IEA will publish its Oil Market Report Friday morning, with the three reports to update guidance for this year’s global oil production and consumption rates.
Brian Milne can be reached at Brian.Milne@dtn.com
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