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NYMEX Crude $ 50.24 DN $.3600
NY Harbor ULSD $1.5634 DN $.0112
NYMEX Gasoline $1.6937 DN $.0093
NEWS
Oil futures retreated Monday, giving back some of last week’s gains as Libya’s largest oil field resumed production and traders continued to eye the commitment of major oil producers to an agreement to limit production.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in May fell 36 cents, or 0.7%, to $50.24 a barrel, ending a four-session run of gains. The U.S. benchmark on Friday marked its strongest weekly performance of 2017. June Brent crude the global benchmark, fell 41 cents, or 0.8%, to settle at $53.12 a barrel on London’s ICE Futures exchange.
Libya pushed production back toward 700,000 barrels a day over the weekend as its Sharara oil field came back online, according to reports. The increased Libyan output and a further increase in U.S. drilling activity last week offset expectations that members of the Organization of the Petroleum Exporting Countries and other non-OPEC producers would extend their pact to cut output by 1.8 million barrels a day, analysts wrote at Tradition in a note.
Oil futures saw three-week highs late last week, buoyed by signs of rising U.S. fuel demand and falling product inventories as well as expectations for continued production curbs, they said. But “stubbornly high global oil and fuel inventories” and an 11th consecutive rise in the Baker Hughes U.S. weekly oil rig count on Friday “appeared to have derailed, albeit temporarily” the recent rally.
OPEC and powerhouse producers, including Russia, late last year agreed to pare output by 1.8 million barrels a day through May, with the aim of reducing global inventories to five-year averages. So far, OPEC’s data indicate a 94% compliance rate.
That, coupled with supportive statements from principal players including Saudi Arabia and Kuwait regarding extending the reductions further into 2017, have boosted prices and brightened sentiment in recent weeks. But some analysts say a closer examination of the deal shows a bumpy road ahead because producers might be tempted to turn their back on it with prices nearly double last year’s lows. “It is our base case that cuts will get extended,” said Scott Darling, head of regional oil & gas for Asia-Pacific at J.P. Morgan. “However, there are clear risks for intra-OPEC tension respect to the fact that the Saudis have not cut back their exports.”
While the kingdom’s production has decreased, domestic crude demand from power generation has fallen due to ample supply of natural gas.