NEWS
Oil Futures Settle Lower
George Orwel DTN Energy Reporter
Bio
3 minutes ago
NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled lower this afternoon in limited post-Christmas trade as worries over demand and expectations for a build in global crude oil supplies prompted profit-taking after last week's gains.
Demand worries were triggered by weak Chinese and Japanese economic data while supply concerns were exacerbated by the prospect of more oil exports from Iran.
Iran Oil Minister Bijan Namdar Zanganeh said Tehran will raise its oil exports to pre-sanctions level. Tehran plans to boost exports by 1.0 million bpd within weeks of the sanctions relief early next year, adding to the glut in global supply.
"Last week's Santa Claus rally in the petroleum markets is corrected with a Monday downturn, with a 2.6% drop in Shanghai equities and a reminder that Iran intends to make crude oil exports a priority in 2016 weighing on market sentiment," said Citi Futures analyst Tim Evans.
He added, "Volumes remain light, particularly in Europe where some traders may be observing Boxing Day, although the markets are fully open."
The NYMEX February WTI crude contract settled down $1.29, or 3.4%, lower at $36.81 per barrel (bbl), off a two-day low at $36.66. The ICE February Brent futures contract fell $1.27, or 3.5%, to $36.62 bbl at settlement, off a two-day low of $1.36.52.
The WTI and Brent contracts have switched between premiums and discounts to each other in low volume post-Christmas trading. The spread settled with WTI at a 19-cent premium to Brent.
In products trade, the NYMEX January ULSD futures contract settled 1.05 cents lower at $1.0904 gallon, off a four-day low at $1.0820. The January RBOB futures dropped 3.17 cents to a $1.2326 gallon, off a two-day low of $1.2199.
On Wall Street, equities fell amid profit taking after last week's Santa Claus rally, while the dollar rallied. A stronger dollar is adding downward pressure on oil futures.
While the oil market has come under pressure this year due to of a glut of global supply, the price of NYMEX WTI futures have been boosted this month by reduced drilling activity in the United States and domestic crude oil stock draws and the prospects for crude exports next year after Congress recently lifted a 30-year export ban.
The lifting of restrictions on crude oil exports is expected to bring more demand for U.S. crude. Enterprise announced last week the sale of 600,000 bbl of crude to Vitol, which is expected to ship those barrels to Europe during the first week of January 2016.
Overseas supply is expected to grow with additional output from Russia and the Organization of Petroleum Exporting Countries. Russia's state-owned oil company Rosneft said it will boost output next year after Russia last month produced a post-Soviet high of 10 million bpd.
OPEC produced 31.4 million barrels per day (bpd) in November and early this month implicitly allowed members to produce freely above quota limits. Saudi Arabia is set to announce its budget for 2016 this week, setting out how much oil it plans to produce.
George Orwel can be reached at george.orwel@dtn.com
Oil Futures Settle Lower
George Orwel DTN Energy Reporter
Bio
3 minutes ago
NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled lower this afternoon in limited post-Christmas trade as worries over demand and expectations for a build in global crude oil supplies prompted profit-taking after last week's gains.
Demand worries were triggered by weak Chinese and Japanese economic data while supply concerns were exacerbated by the prospect of more oil exports from Iran.
Iran Oil Minister Bijan Namdar Zanganeh said Tehran will raise its oil exports to pre-sanctions level. Tehran plans to boost exports by 1.0 million bpd within weeks of the sanctions relief early next year, adding to the glut in global supply.
"Last week's Santa Claus rally in the petroleum markets is corrected with a Monday downturn, with a 2.6% drop in Shanghai equities and a reminder that Iran intends to make crude oil exports a priority in 2016 weighing on market sentiment," said Citi Futures analyst Tim Evans.
He added, "Volumes remain light, particularly in Europe where some traders may be observing Boxing Day, although the markets are fully open."
The NYMEX February WTI crude contract settled down $1.29, or 3.4%, lower at $36.81 per barrel (bbl), off a two-day low at $36.66. The ICE February Brent futures contract fell $1.27, or 3.5%, to $36.62 bbl at settlement, off a two-day low of $1.36.52.
The WTI and Brent contracts have switched between premiums and discounts to each other in low volume post-Christmas trading. The spread settled with WTI at a 19-cent premium to Brent.
In products trade, the NYMEX January ULSD futures contract settled 1.05 cents lower at $1.0904 gallon, off a four-day low at $1.0820. The January RBOB futures dropped 3.17 cents to a $1.2326 gallon, off a two-day low of $1.2199.
On Wall Street, equities fell amid profit taking after last week's Santa Claus rally, while the dollar rallied. A stronger dollar is adding downward pressure on oil futures.
While the oil market has come under pressure this year due to of a glut of global supply, the price of NYMEX WTI futures have been boosted this month by reduced drilling activity in the United States and domestic crude oil stock draws and the prospects for crude exports next year after Congress recently lifted a 30-year export ban.
The lifting of restrictions on crude oil exports is expected to bring more demand for U.S. crude. Enterprise announced last week the sale of 600,000 bbl of crude to Vitol, which is expected to ship those barrels to Europe during the first week of January 2016.
Overseas supply is expected to grow with additional output from Russia and the Organization of Petroleum Exporting Countries. Russia's state-owned oil company Rosneft said it will boost output next year after Russia last month produced a post-Soviet high of 10 million bpd.
OPEC produced 31.4 million barrels per day (bpd) in November and early this month implicitly allowed members to produce freely above quota limits. Saudi Arabia is set to announce its budget for 2016 this week, setting out how much oil it plans to produce.
George Orwel can be reached at george.orwel@dtn.com