Oil Futures Settle Mixed
NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled mixed Thursday afternoon, with the West Texas Intermediate crude contract giving back a fraction of the prior session's 8% gain amid doubt that Russia and the Organization of Petroleum Exporting Countries would agree to a shared production cut despite an oversupplied world market.
The complex had been volatile earlier in the session, as the U.S. dollar's weakness boosted oil prices while excess supply pressed crude prices lower. The greenback fell to a better than three-month low on concern over U.S. economic heath and expectations the Federal Reserve would delay raising the federal funds rate as previously anticipated.
While announcing the first rate hike in nearly a decade back in December, the central bank suggested four more increases in the important borrowing rate this year. That's unlikely to happen now amid signs of an economic slowdown. William Dudley, head of the Federal Reserve Bank of New York, said Wednesday that economic conditions have tightened in December and policymakers will have to take that into consideration.
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A weaker dollar is bullish for oil prices. However, a slowing economy would limit demand for oil.
"The market is also continuing to evaluate the odds that OPEC and non-OPEC producers will come together to reduce output," said analyst Tim Evans at Citi Futures.
Overseas, Venezuelan Oil Minister Eulogio del Pino is corralling support for an OPEC meeting this month to decide whether to cut production. A report said six producing countries, including Iran and Iraq and non-members Russia and Oman, supported having a meeting, but not Saudi Arabia.
Without Saudi Arabia there would be no cuts because OPEC decides issues by consensus, analysts said. OPEC is now split into two camps on the issue of cuts and Saudi Arabia is leading the Arab Gulf camp holding the line against output cuts.
NYMEX March WTI crude futures settled 56cts lower at $31.72 bbl, reversing off a two-day spot high of $33.60. April Brent oil futures on the IntercontinentalExchange eased 58cts to $34.46 bbl, reversing off a three-day high of $35.84. Brent rallied 7.0% Wednesday.
Products held onto early gains, with the NYMEX March ULSD futures contract settling 0.19cts higher at $1.0805 gallon, moving off a one-month spot high of $1.1181. NYMEX March RBOB futures settled up 1.47cts at $1.0284 gallon, off a two-day high of $1.0735 gallon.
On Wall Street leading stock indices were higher, with the Dow Jones Industrial Average at one point posting gains of about 140 points but have since trimmed the advance as traders await the release of January's nonfarm payroll report on Friday.
The market expects the national unemployment rate to stay steady at 5% while 190,000 jobs are expected to have been added for the month. The pace of job growth slowed due to slack in the U.S. economy.
George Orwel, 1.718.522.3969, george.orwel@dtn.com, www.schneider-electric.com. (c) 2016 Schneider Electric. All rights reserved.
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