Oil Futures End Lower
Oil Futures End Lower
NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled lower Monday afternoon on concern over a persistent oil supply glut domestically and internationally, while oil speculators targeted the $50 bbl strike price for options on the November West Texas Intermediate crude futures contract.
"I think oil prices fell more due to the expiration of the options contract than due to OPEC," said analyst Phil Flynn at Price futures. "The focus now is on the December WTI contract."
Other analysts also pointed to rising oil supply from Libya and comments from Iran to the effect that Tehran will not cooperate with other members of the Organization of Petroleum Exporting Countries in reducing production in underpinning Monday's bearish market dynamics.
Libyan officials said they boosted output to 560,000 bpd this week from 540,000 bpd last week, while Iran plans to raise its production to 4.0 million bpd within two weeks, Bloomberg News reported, up from 3.665 million bpd in September, OPEC said in a report last week, citing secondary sources.
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Flynn said Saudi Arabia has shown it is serious about reining in oil production. OPEC and Russia hope to meet in the next two weeks to work out a plan to coordinate production goals.
A technical committee created under the Sept. 30 OPEC accord reached in Algiers to work out details of the plan to cut production will meet for two days in late October ahead of the Vienna summit.
Baker Hughes Inc. said Friday that rigs drilling for oil in the United States were up four to a fresh eight-month high at 432 during the week-ended Oct. 14, raising concern over rising domestic crude supply going forward.
NYMEX November WTI crude futures settled 41cts lower at $49.94 bbl ahead of its expiration on Thursday (10/20), with the December contract down 38cts at $50.37.
The December Brent futures contract on IntercontinentalExchange dropped 43cts at $51.52 bbl at settlement.
In products trade, NYMEX November ULSD futures contract fell 1.12cts to a $1.5561 gallon settlement, while the November RBOB futures contract was little changed, settling down 0.12cts to $1.4924 gallon.
Earlier, oil futures edged higher overnight on geopolitical concerns after the Iraqi army, backed by U.S. airpower, launched an offensive against Islamic State terrorists in Mosul and on oil supply data released last week.
In Libya, U.S. aircraft hit IS targets in Sirte, the pentagon said. The loss of Sirte would close down Islamic State's main stronghold in North Africa and its only base outside Iraq and Syria, as the terrorist group comes under pressure in Mosul.
Elsewhere, Saudi Arabia is prepared to agree to a ceasefire in Yemen if the Iran-allied Houthis agree.
George Orwel can be reached at george.orwel@dtn.com
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