WASHINGTON (DTN) -- Crude futures nearest delivery on the New York Mercantile Exchange and the Intercontinental Exchange fell sharply in morning trade Wednesday after Saudi Arabia officials indicated the kingdom's unilateral production cut of 1 million barrels per day (bpd) this month and in March would not continue into April, with the production increase to offset weather-related output curtailments in Texas shale fields this week.
NYMEX West Texas Intermediate futures for March delivery turned negative in response to the announcement, falling from a more than one-year high of $61.26 per barrel (bbl), trading little changed at last look near $60 bbl. The international crude benchmark Brent April contract was trading at $63.60 bbl following an overnight high of $64.75 bbl. After slumping to a $1.7599 low, March ULSD futures were up 1.35 cents near $1.7860 gallon, while down from a $1.8240 high. March RBOB futures, which traded at a $1.9050 high, was up about 0.5 cents near $1.8685 gallon.
Media airwaves were hit with reports Saudi Arabia plans to boost output by at least 1 million bpd in April to counter a supply shortfall from U.S. shale fields. Preliminary figures indicate output in the United States fell by as much as 3.5 million bpd this week after a cold blast in Texas froze wellheads and pipelines and cut through supply chains, with severe disruptions expected to last for days if not weeks.
Traders have speculated Organization of the Petroleum Exporting Countries led by Saudi Arabia and ten Russia-led non-OPEC producers would consider easing their collective production curtailments of 7.1 million bpd in response to an unprecedent weather emergency in the United States. At the very least, Saudi Arabia was thought to have more room to raise output after announcing a unilateral cut of 1 million bpd on Jan. 5. The group is set to meet next on March 4. Wednesday morning's reports are the clearest indication yet that OPEC+ will look to rapidly raise production in coming months after years of holding output offline in an effort to balance the market and boost global crude prices.
Liubov Georges can be reached at email@example.com