The light, sweet crude oil price for September delivery jumped by nearly $1.80/bbl on the New York market Aug. 11 while the Brent contract for October gained nearly $2/bbl on the London market after a Saudi Arabian official suggested the Saudis would work with other producers to stabilize prices.
Saudi Energy Minister Kahlid al-Falih made remarks suggesting Saudi Arabia might be willing to revisit talks with members of the Organization of Petroleum Exporting Countries and other producers on limiting production.
“If there is a need to take any action to help the market rebalance, then we would, of course in cooperation with OPEC and major non-OPEC exporters,” al-Falih said.
Some analysts remain skeptical that Saudi Arabia would support a collective production cap. An April meeting between OPEC and non-OPEC producers failed to reach any such agreement.
But future talks on the same topic are being discussed. Qatar’s Energy Minister and OPEC Pres. Mohammed bin Saleh al Sada has said cartel members will participate in such talks Sept. 26-28 on the sidelines of the International Energy Forum in Algeria (OGJ Online, Aug. 8, 2016).
In currencies, the US dollar rose Aug. 11 although it has weakened overall in recent weeks, supporting oil prices. Oil trades in dollars so a weakening dollar makes oil less expensive for buyers using other currencies.
The Wall Street Journal Dollar Index, which measures the US currency against 16 others, rose 0.2% to 86.44 on Aug. 11.
Investors await indicators regarding the timing of anticipated US interest rate increases. Minutes from the Federal Reserve’s July meeting are scheduled to be released next week. Fed Chair Janet Yellen also is expected to speak in Jackson Hole, Wyo., later this month.
US natural gas prices fell on both futures and the spot market Aug. 11 after the US Energy Information Agency reported a 29 bcf injection into underground gas storage across the Lower 48 (OGJ Online, Aug. 11, 2016).
Raymond James analysts said the injection was bigger than expected and followed a surprise withdrawal from the previous week.
“Given the improving fundamentals, primarily due to US production declines and strong demand, we are increasingly confident the gas markets can look past high storage in 2016 and towards the improving fundamental outlook for 2017,” RJA analysts said in a research note.
RJA has forecast an average $3.25/MMbtu price for 2017 compared with the Aug. 11 futures price of $2.55/MMbtu.
The NYMEX crude oil contract for September jumped $1.78 to $43.49/bbl on Aug. 11. The October contract climbed $1.77 to close at $44.23/bbl.
The natural gas contract for September fell 1¢ to a rounded $2.55/MMbtu. On the spot market, the Henry Hub gas price declined 6¢ to $2.67/MMbtu on Aug. 11.
Heating oil for September gained 7¢ to a rounded $1.38/gal. The price for reformulated gasoline stock for oxygenates blending for September rose 6¢ to a rounded $1.36/gal.
The Brent crude contract for October on London’s ICE rose $1.99 to $46.04/bbl. The contract for November was up $1.93 to $46.36/bbl. The September gas oil contract settled at $403/tonne on Aug. 11, up $16.75.
The average price for OPEC’s basket of 12 benchmark crudes was $40.62/bbl, up 5¢.
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