MARKET WATCH: Oil prices climb as OPEC considers production cut

Crude oil prices climbed for a second consecutive day on the New York and London markets Sept. 29 after the Organization of the Petroleum Exporting Countries said it was willing to consider cutting the cartel’s total production quota.

OPEC members met in Algeria Sept. 28 and announced a tentative agreement but details of any final agreement await a Nov. 30 OPEC meeting, including the quota for individual producers.

Russian Energy Minister Alexander Novak said Russia has no immediate plans to change its current oil production level. Bloomberg reports Russia averaged an estimated 10.71 million b/d in August and is on track to average 11.1 million b/d in September.

"Russia will carefully consider those proposals, which will be eventually drawn up,” Novak said of OPEC. “But our position is keeping the volume of production at the level that has been reached.”

Novak told reporters that Russia was not yet ready to discuss any specific production cap, assuming that OPEC actually finalizes a production cut. Russia is not an OPEC member.

Energy prices

The November crude oil contract on the New York Mercantile Exchange rose 78¢ on Sept. 29 to close at $47.83/bbl. The December contract was up 75¢ to $48.40/bbl.

The natural gas contract for November dropped 4¢ to a rounded $2.95/MMbtu. On the spot market, the Henry Hub gas price declined 3¢ to $2.95/MMbtu.   

Heating oil for October gained nearly 2¢ to a rounded $1.51/gal. The price for reformulated gasoline stock for oxygenates blending was down 1¢ to a rounded $1.47/gal.

The November Brent crude contract on London’s ICE increased 55¢ to settle at $49.24/bbl and the December contract climbed 57¢ to settle at $49.81. The October gas oil contract settled at $444.75/tonne, up $28.75.

The average price for OPEC’s basket of benchmark crudes on Sept. 29 was $44.34, up $2.13.

Contact Paula Dittrick at paulad@ogjonline.com.

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