The light, sweet crude oil contract for October delivery gained modestly on the New York market Sept. 19, settling above $43/bbl on mixed signals from the Organization of Petroleum Exporting Countries regarding informal talks later this month.
OPEC Sec. Gen. Mohammed Barkindo on Sept. 17 said he expects no decision will be reached during talks among the cartel’s members on the sidelines of another energy conference in Algeria starting Sept. 26.
“It is an informal meeting, it is not a decision-making meeting,” Barkindo said.
Separately, Venezuelan President Nicolas Maduro said OPEC members and non-OPEC producers could reach an agreement to freeze production levels.
“We’re close to a deal between OPEC producer countries and non-OPEC,” Maduro told reporters during a news conference after he met with Iranian President Hassan Rouhani.
McKinsey Energy Insights (MEI), an energy data and analytics firm in London, said world oil oversupply will continue into at least 2017. Under a slow recovery case, the world oil market will take 6 months for oversupply to disappear and another 6-12 months to burn excess inventories, MEI said.
The pace of an oil-price recovery depends on gross domestic product growth, the decline rate in producing fields worldwide, a slowdown of US light, sweet oil production, and OPEC, MEI said. The actions of Iran and Saudi Arabia particularly will influence OPEC behavior, MEI said.
MEI’s James Eddy said, “The market is recovering but this may be slower than previously expected. We expect demand growth to decelerate as a result of slowing economic development and structural shifts in the transport sector.”
MEI outlined a key short-term risk in which OPEC members could add more than 3-4 million b/d in incremental production by 2019. “This could potentially stifle oil prices further into 2018-19,” Eddy said.
The October crude oil contract on the New York Mercantile Exchange gained 27¢ on Sept. 19 to close at $43.30/bbl. The November contract was up 24¢ to $43.86/bbl.
The natural gas contract for October declined 1.4¢ to a rounded $2.93/MMbtu. On the spot market, the Henry Hub gas price was up 3¢ to $2.97/MMbtu.
Heating oil for October dropped 1¢ to a rounded $1.39/gal. The price for reformulated gasoline stock for oxygenates blending was down 4¢ to a rounded $1.42/gal.
Gasoline prices fell as concerns eased about the possibility of long-term gasoline interruptions to the US East Coast. The Colonial Pipeline has partially closed a main gasoline pipeline for more than a week following a leak in Alabama.
Colonial Pipeline Co., which operates the pipeline, started building a temporary pipeline segment around the leak.
The November Brent crude contract on London’s ICE gained 18¢ to settle at $45.95/bbl and the December contract rose 18¢ to settle at $46.42/bbl. The October gas oil contract settled at $418.25/tonne, up $5.75.
The average price for OPEC’s basket of 12 benchmark crudes on Sept. 19 was $42.09/bbl, up 35¢.
Contact Paula Dittrick at firstname.lastname@example.org.