Oil Higher in Monday Trade

WASHINGTON, D.C (DTN) -- New York Mercantile Exchange nearest delivered oil futures and Intercontinental Exchange Brent futures moved higher Monday morning, extending first quarter gains on upbeat manufacturing data from China and the United States amid renewed bullish sentiment in the market.

In midmorning trading, West Texas Intermediate May contract advanced $0.88 to trade at $61.02 barrel (bbl) -- the first time above $61 since mid-November, while ICE Brent June futures moved $0.92 up to $68.50. Nymex ULSD May contract gained 1.28 cent to $1.9842 gallon, while RBOB May futures rallied 1.14 cent to $1.8939 gallon.

Monday' gains came after oil futures on Friday notched the strongest quarterly performance in almost 10 years, gaining 32% since January on renewed economic optimism.

The United States reading on manufacturing activity came in mixed to start the second quarter, with Institute of Supply Management PMI showing expansion at 55.3%, while IHS Markit reported U.S. PMI at 52.5% for March, down from 53% in February and below market expectations of 52.6%.

Against mixed U.S. data, the Caixin Markit Manufacturing Purchasing Index firmed to 50.5 in March, while China's Federation of Logistics and Purchasing Manufacturing jumped 1.3 points to correlate Caixin PMI at 50.5 in the profiled month. Both indices showed the manufacturing sector returned to growth last month at the fastest pace in eight months. Readings under 50 mean contraction.

Over the weekend, Venezuela suffered through the third blackout in just four weeks, with only 15% of the country back online following a Saturday power outage, according to a group monitoring internet access. As grid failures became a regular occurrence in the country, the U.S. Treasurer's Office of Foreign Assets Control has pressured foreign traders and refiners to halt any transactions with Venezuela. Reuters reported that the United States would consider any sort of a deal, be it indirect or even a barter deal, punishable under the breach of sanctions, despite sanctions only against U.S. entities doing business with Venezuela.

The Trump administration is reportedly prioritizing the suspension of naphtha sales to Venezuela, as it needs diluents to export its extra-heavy crude. Venezuelan oil exports fell to less than 1 million bpd in the first four weeks of the year after the latest sanctions came into effect in January.

Oil futures continue to draw support from the declining number of oil rigs in the United States, which fell to the lowest in nearly a year on Friday, indicating a persistent trend in slowing drilling activity. Baker Hughes data reported U.S. drilling rigs moved lower for the 6th consecutive week, dipping eight to 813 last week, down 69 in the first quarter.

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