The light, sweet crude contract for November delivery climbed more than $1/bbl to approach $50/bbl by settlement Oct. 5 after the US Energy Information Administration reported the country’s oil inventories fell sharply to the lowest level since January. Oil prices continued to climb Oct. 6 in early trading.
EIA said crude oil supplies dropped 3 million bbl for the week ended Sept. 30, down for a fifth consecutive week. The latest estimated total was 499.7 million bbl, which was still 38.7 million bbl higher than for the same time a year ago (OGJ Online, Oct. 5, 2016).
US oil production for the week ended Sept. 30 was 8.467 million b/d, down 30,000 b/d from the previous week, the Petroleum Status Report said. Production across the Lower 48 dropped 38,000 b/d, which was offset by Alaska’s weekly gain of 8,000 b/d.
Oil traders closely monitored Hurricane Matthew, expected to hit the southeastern US but no oil and gas facilities are in danger if the storm turns north as most forecasters expect.
Thirteen investment banks surveyed by the Wall Street Journal forecast Brent crude will average $56/bbl during 2017, down more than $1/bbl from the September survey.
Jefferies issued a note saying the Organization of Petroleum Exporting Country “surprised the market” with its statement that it’s willing to consider a production target that implies a cut of as much as 740,000 b/d.
“Implementation may prove unsuccessful, but the mere threat of a production cut should put a floor under oil prices until the next OPEC meeting on Nov. 30,” Jefferies analysts said.
“OPEC’s potential strategy shift away from growing market share and towards accelerating a fundamental rebalancing of the market (and supporting oil prices) could be an interesting exercise in game theory,” Jefferies added, adding it remains skeptical about OPEC.
The November crude oil contract on the New York Mercantile Exchange gained $1.14 on Oct. 5 to close at $48.83/bbl. The December contract was up $1.08 to $50.38/bbl.
The natural gas contract for November gained nearly 8¢ to a rounded $3.04/MMbtu. On the spot market, the Henry Hub gas price rose 3¢ to $2.86/MMbtu.
Heating oil for November rose nearly 3¢ to a rounded $1.58/gal. The price for reformulated gasoline stock for oxygenates blending for November fell less than a penny to $1.49/gal.
The December Brent crude contract on London’s ICE increased 99¢ to settle at $51.86/bbl, and the January contract rose $1.02 to settle at $52.45/bbl. The October gas oil contract settled at $465.25/tonne, up $8.75.
The average price for OPEC’s basket of benchmark crudes on Oct. 5 was $47.74/bbl, up $1.04.
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