Oil Futures End Little Changed Monday

WASHINGTON (DTN) -- Fading from session highs, New York Mercantile Exchange oil futures and Brent crude on the Intercontinental Exchange settled little changed on Monday, with markets focused on the resumption in U.S.-China trade talks later this week. Meanwhile a survey showed crude production by the Organization of the Petroleum Exporting Countries plummeted to multiyear low in September.

NYMEX November West Texas Intermediate futures settled down $0.06 at $52.75 per barrel (bbl), while ICE December Brent moved $0.02 lower to a $58.35 bbl settlement. NYMEX November ULSD futures gained 0.88 cents at $1.9033 gallon and the November RBOB contract was down 0.4 cents at $1.5694 gallon.

Oil futures rallied more than 1% in early Monday afternoon trading after S&P Platt's survey showed OPEC crude production plunged to 28.45 million barrels per day (bpd) in September -- the lowest output rate since May 2009. The steep drop was led by production declines in Saudi Arabia following the attacks on the Abqaiq processing facility and Khurais oil field, which caused the kingdom's output to plummet to 8.45 million bpd last month.

Sanctions-hit Iran and Venezuela continued to post multiyear low output figures in September, leading to overall compliance rate with the OPEC+ accord to jump 308% in September. According to the survey, Iran's crude production dropped to 2.23 million bpd -- the lowest since 1998, while in Venezuela output shrunk to the lowest level since January 2003 at less than 600,000 bpd.

OPEC will publish official figures on the group's production for last month in its Monthly Oil Market Report due this Thursday (10/10). Preceding OPEC's report, U.S. Energy Information Administration will release supply and demand projections Tuesday (10/8), and the International Energy Agency their findings on Friday (10/11).

OPEC's Secretary General Mohammed Barkindo said Monday the cartel does not consider further production cuts and instead will focus on reaching full compliance with the existing agreement to withhold 1.2 million bpd from the global market through the second quarter of 2020.

In Iraq, deadly antigovernment protests in OPEC's second largest producer continued to spread across the country on Monday, gripping southern provinces that account for roughly one-third of national output. Seven days of protests threaten to disrupt 3.43 million bpd of exports from Iraq's Basra terminals, if violence escalates further. Iraq's officials said Sunday that 104 people have been killed and more than 6,100 wounded.

On the economic front, traders are focused on the new round in U.S.-China trade talks set to resume this week in Washington, D.C. Thursday and Friday (10/10-11). Contradicting headlines surrounding the high-level meetings hit the airwaves Monday, swinging the markets between gains and losses. U.S. equities ended the session little changed, with Dow Jones Industrial Average edging down 67 points and S&P 500 down 0.3%.

According to Fox News, the Chinese Commerce Ministry said Beijing is ready to reach an agreement on the parts of the negotiations both sides have agreed upon.

"The Ministry tells us they are prepared to set out a timetable for the harder issues to be worked out next year" a correspondent at Fox News tweeted.

However, earlier report from Bloomberg suggested China intends to significantly narrow the scope of the agreement, leaving out the most contentious issues of the nation's industrial policy and intellectual property protection. U.S. President Donald Trump once again reiterated this weekend that the deal must be 100% in favor of the United States, while also saying there is a "a very good chance" an agreement would be reached.

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

(BAS)