Crude Futures Little Changed Thursday

WASHINGTON, D.C. (DTN) -- Nearest delivered New York Mercantile Exchange oil futures and Brent on the Intercontinental Exchange settled mixed in choppy trade Thursday amid ongoing concerns over slowing economic growth, as world's leaders gather in Japan at Osaka for the G-20 Summit

NYMEX August West Texas Intermediate futures were up $0.05 to settle at $59.43 barrels (bbl), with the ICE August Brent contract also $0.06 higher at $66.55 bbl ahead of contract expiration Friday afternoon. September Brent contract finished the session at a $0.88 discount to the expiring contract. NYMEX July RBOB futures settled 2.38 cents lower to $1.9466-gallon, trading at a 3.2cts premium to August delivery. NYMEX July ULSD futures were 1.88 cents lower to finish the session at $1.9525 gallon, with the August contract holding a nearly 1-cent premium to July delivery.

Mixed session comes ahead of a highly anticipated meeting between U.S. President Donald Trump and China's President Xi Jinping at the G-20 Summit this weekend, which could produce a breakthrough in months-long trade dispute between the two countries or result in an escalation in tensions that trigger additional tariffs.

Some analysts believe Trump will also seek to build consensus for his administration's tougher line against Iran at a scheduled meeting with Russia's President Vladimir Putin. Russia has been highly critical of a potential U.S. military strike against Iran, pointing to a long-term instability in a region critical to global energy production.

Putin and Saudi Crown Prince Mohammed bin Salman are also scheduled to meet at the G-20 Summit on Friday, and could indicate the policy direction for managing the oil market ahead of a meeting by the Organization of the Petroleum Exporting Countries and non-OPEC producers led by Russia early next week.

On the heels of the G-20 Summit, OPEC and 10 non-OPEC allies including Russia will discuss an extension of the production cuts agreement. Market observers believe if the Trump-Xi meeting fails to produce a positive outcome, OPEC members will have to consider the scenario of deeper cuts, which would be complex to arrange in the late stage of negotiations. However, Iraq's energy minister already mentioned the idea on Thursday, while noting OPEC+ was expected to rollover the deal and discuss deeper production cuts. Iraq is now the second country after Algeria to flaunt the idea of bigger supply reduction.

Oil futures were boosted on Wednesday after bullish government data showed a much larger-than-expected 12.8 million bbl drop in U.S. commercial crude stockpiles during the week ended June 21. West Texas Intermediate found additional support from a lower rate of domestic production, which slid to a six-week low after declining for three consecutive weeks. Crude oil imports also declined, averaging 6.7 million barrels per day (bpd) as of June 21, down 812,000 bpd from the previous week, while exports spiked to a 3.8 million bpd record high.

The U.S. dollar inched higher Thursday for a second session from Tuesday's 95.487 three-month low settlement in index trading ahead of the G-20 Summit. The latest weakness in U.S. dollar was spurred by expectations for loosening monetary policy, with the Federal Reserve expected to cut the key federal funds rate at their July 30-31 meeting. The dollar and WTI futures have an inverse relationship.

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

(BAS)