NEW YORK (DTN) -- Oil futures nearest delivery traded on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange advanced, with West Texas Intermediate (WTI) settling at a four-month high in trading Monday afternoon. The Organization of Petroleum Exporting Countries and its allies pledged to maintain 1.2 million barrels per day (bpd) in production cuts through the end of June.
At the market close, Nymex April WTI futures were up $0.57 at $59.09 barrel ahead of the contract's expiration Wednesday afternoon, with May delivery ending at a $0.29 bbl premium to the expiring contract. ICE May Brent futures settled up $0.38 to $67.54 bbl. NYMEX April RBOB futures surged to $1.8969 gallon a fresh 5-1/2 months high on the spot continuous chart, settling up 2.51 cents at $1.8828. April ULSD futures settled fractionally higher at $1.9678 gallon, holding above support at the $1.9509 100-day moving average.
Oil futures were bolstered following news OPEC+ would keep their production cuts in place until the end of June, as it points to bloated commercial oil inventories held by the 35-country bloc Organization for Economic Cooperation and Development (OECD). Saudi Energy Minister Khalid al-Falih said as long as the levels of inventories are rising and the markets are far from normal levels, OPEC will stay the course, guiding the market towards balance.
According to International Energy Agency, commercial stock levels in the OECD countries remained above the five-year average in January, with 8.6 million bbl increase in the profiled month pushing the inventory level to 2.88 billion bbl.
Monday morning, the Joint Ministerial Monitoring Committee said compliance with the 1.2 million bpd in crude production cuts under the OPEC+ accord reached 90% in February from 83% in January.
OPEC+ cancelled an April meeting since it agreed to let the six-month agreement run its term, and will meet next on June 25-26. Several wire services reported that delay in their next meeting allows OPEC+ to better assess how U.S. sanctions on Iran and Venezuela will affect the oil market in the coming months.
In Venezuela, oil output had dropped a further 100,000 bpd in February to 1.14 million bpd, as the country's oil sector faces deterioration, according to IEA. In its Monthly Oil Market report released Friday, IEA said the country's oil industry was severely disrupted due to widespread power losses on a significant scale. The lost supply could present a challenge to the global oil market.
Monday afternoon, Energy Information Administration published its monthly Drilling Productivity Report, forecasting steady growth in oil output in the seven tight-oil producing regions of the United States, from 8.507 million bpd in March to 8.592 million bpd in April. EIA projects the largest output increase in April will come from the Permian Basin at 40,000 bpd to 4.177 million bpd.
Last week, EIA revised projected U.S. oil production in 2019 down 110,000 bpd to 12.3 million bpd for 2019, and cut its February output estimate 100,000 bpd to 11.9 million bpd.
Major U.S. equity indices continued higher Monday afternoon with the Dow Jones Industrial Average gaining 65.23 points to 25,914 late session, while the S&P 500 Index added 0.37% on the session ahead of the Tuesday-Wednesday Federal Open Market Committee meeting, which will include an update on the economic outlook. Federal Reserve members are expected to announce there will be little or no tightening in monetary policy through higher interest rates in 2019. In December, the central bank hiked the federal funds rate to 2.5% causing an extensive selloff in equities and oil futures. The global oil market has been under continued pressure from concerns slower economic growth would reduce demand.
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