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NYMEX Crude $ 45.50 UP $.6700
NY Harbor ULSD $1.4265 UP $.0180
NYMEX Gasoline $1.3464 UP $.0300
NEWS
Oil futures settled at their highest level in about a week ahead of the latest updates on U.S. petroleum supplies, as traders weighed the likelihood that major producers will reach a deal to curb output later this month.
“Crude oil has been volatile recently, not really knowing which direction to maintain, as fundamental news regarding a potential freeze is causing classic ‘whipsaw’ range trading action,” said Jason Rotman, president of Lido Isle Advisors. “We believe the overall directional trend is still downward pointing, so we would not be surprised to see WTI crude oil test its recent low area at $43,” said Rotman.
October West Texas Intermediate crude tacked on 67 cents, or 1.5%, to settle at $45.50 a barrel on the New York Mercantile Exchange. It posted gains over the past two trading sessions, following a four-session decline. November Brent crude on London’s ICE Futures exchange rose 72 cents, or 1.5%, to $47.98 a barrel. Both grades of crude saw prices finish at their strongest levels since Aug. 30. Prices got a boost early this week following the announcement that Saudi Arabia and Russia had agreed to cooperate to stabilize the oil market. But without a specific plan to cap output, futures prices have struggled for direction.
Later this month, members of the Organization of the Petroleum Exporting Countries are set to discuss ways to stabilize the oil market. Major oil producers have mentioned the possibility of a coordinated output agreement. Several members of OPEC, however, including Iran, Nigeria and Libya, are looking to increase output from current levels and will likely be unwilling to freeze production. “Broadly speaking, there continues to be no firm indication that OPEC could convince all members to freeze production at current output levels,” said Robbie Fraser, commodity analyst at Schneider Electric. “Expect any emerging details surrounding OPEC coordination to continue to be a short-term price driver until their informal meeting later this month.” The National Iranian Oil Company on Wednesday said the country will increase output gradually in line with customer needs and export 2.2 million barrels a day in September, according to Dow Jones. It also said it expects the oil market to rebalance in the fourth quarter 2016 or in early 2017.
A monthly report from the Energy Information Administration showed higher 2016 forecasts for U.S. crude production and prices. The government agency forecast an average price of $41.92 a barrel for WTI this year, up from a previous estimate of $41.16. Brent crude is seen averaging $42.54 this year, up from the $41.60 August forecast. The EIA also raised its U.S. oil production estimate for 2016 by 0.4% to 8.77 million barrels a day, and for 2017 by 2.5% to 8.51 million barrels a day. Global oil inventories are expected to climb in the second half of this year and should “limit upward pressure on oil prices in the month ahead,” said Adam Sieminski, administrator at the U.S. Energy Information Administration, in a statement. Still, the pace of builds in the second half will “be slower” than in 2015 and early 2016. Around the middle of 2017, drawdowns in global oil inventories are likely to begin, which will contribute to higher oil prices in the second quarter of next year, he said.
Separately, the American Petroleum Institute was set to report its weekly update on domestic oil stockpiles Wednesday afternoon, while the EIA will release its own data Thursday morning. The reports were each postponed by a day because of Monday’s Labor Day holiday. S&P Global Platts said it expects oil inventories rose 425,000 barrels last week, as U.S. refinery utilization declined amid disruptions from Hurricane Hermine in the Gulf of Mexico. “Crude stocks remain ample—and have risen five of the last six reporting periods—under the weight of strong imports,” according to Platts.