Oil prices steady after rising to highest since November, Brent above $90 per barrel
Oil prices were stable on Wednesday after rising to their highest levels since November last year on information about Saudi Arabia’s plans to extend voluntary production cuts until the end of 2023.
The cost of October futures for Brent on the London ICE Futures exchange at 8:10 a.m. on Wednesday is $90.03 per barrel, which is $0.01 (0.01%) lower than the price at the close of the previous session. On Tuesday, these contracts rose by $1.04 (1.2%) to $90.04 per barrel, the highest since November 16.
The price of October futures for WTI in electronic trading on the New York Mercantile Exchange (NYMEX) fell by $0.03 (0.03%) to $86.66 per barrel. As a result of the previous trading, the value of these contracts increased by $1.14 (1.3%) to $86.69 per barrel, the highest value since November 15.
Saudi Arabia will continue to voluntarily reduce oil production by 1 million bpd until the end of 2023, the kingdom’s state agency reported on Tuesday, citing an official source in the Ministry of Energy.
“Further supply constraints will support oil prices,” analysts at ANZ Group Holdings Ltd. said in a research note. “We are likely to see a significant reduction in oil inventories as a result of these restrictions.
Benchmark oil prices are moving mixed near multi-month highs on Tuesday morning.
The price of November Brent futures on London’s ICE Futures exchange is at $88.87 a barrel by 8:29 a.m. Q2, down 13 cents (0.15%) from the previous session’s close. On Monday, these contracts rose by $0.45 (0.5%) to $89 per barrel.
Quotes of futures for WTI crude oil for October at the electronic trading of the New York Mercantile Exchange (NYMEX) by the specified time rose by 32 cents (0.37%) and amounted to $ 85.87 per barrel. On Monday, the main trades were not held due to a day off in the U.S. (Labor Day).
Prices are supported by expectations of the extension of production reduction measures by OPEC+ countries.
Saudi Arabia is also expected to extend the voluntary production cut by 1 million barrels per day for October.
At the same time, traders regard the signs of possible cooling of the American economy as a reason for the end of the cycle of interest rate hikes by the Federal Reserve, which also strengthens market optimism.
An additional positive factor is the news of an unexpected increase in activity in the manufacturing sector of the Chinese economy. The Purchasing Managers’ Index (PMI) in China’s manufacturing sector in August hit its highest level since February, Caixin Media Co., which calculates the indicator, said on Friday. The index rose to 51 points from 49.2 in July. The consensus forecast, cited by Trading Economics, called for a rise to 49.3 points. A value above the 50-point mark indicates an increase in activity in the sector.
Benchmark oil prices, which ended last week at their highest levels this year, are little changed on Monday morning.
The price of November futures for Brent on the London ICE Futures exchange at 8:08 a.m. is $84.53 per barrel, which is 6 cents (0.07%) higher than at the close of the previous session. Last Friday, these contracts rose by $1.72 (2%) to $88.55 per barrel.
Quotes for WTI futures for October in electronic trading on the New York Mercantile Exchange (NYMEX) by this time increased by 9 cents (0.11%) to $85.64 per barrel. At the end of the previous session, they rose by $1.92 (2.3%) to $85.55 per barrel.
Over the past week, Brent rose in price by 5.5%, WTI by 7.2%, and the two brands ended trading on Friday at their highest levels since November 17 and 16, 2022, respectively.
The quotes were supported by fears of a reduction in supply in the market, as well as positive statistics from China.
The Purchasing Managers’ Index (PMI) in China’s manufacturing industry in August updated its highest level since February, Caixin Media Co. reported on Friday, which calculates the indicator. The index rose to 51 points from 49.2 points in July. A value above 50 points indicates an increase in activity in the sector.
Traders also expect Saudi Arabia to extend its voluntary production cuts by 1 million barrels per day to October.
In addition, the latest US data is “relatively balanced and generally in line with expectations that the peak level of Federal Reserve interest rates has already been reached, which in turn spurs hopes for a soft landing for the US economy,” said Tyler Ritchie of Sevens Report Research.
Meanwhile, data from the oilfield services company Baker Hughes showed that over the past week, the number of operating oil rigs in the United States remained unchanged at 512 units, the lowest since February 2022. The number of gas rigs decreased by 1 to 114.
Benchmark oil prices continue to rise on Wednesday afternoon amid concerns over Hurricane Idalia and the situation in Gabon.
The price of October futures for Brent on the London-based ICE Futures exchange at 14:29 Q2 is $86.02 per barrel, up $0.53 (0.62%) from the previous session’s close.
Quotes of futures for WTI crude oil for October at the electronic trading of the New York Mercantile Exchange (NYMEX) by the specified time increased by $0.56 (0.69%) and amounted to $81.72 per barrel.
Tropical Storm Idalia strengthened to a hurricane the day before, the National Hurricane Warning Service (National Hurricane Center, NRC) of the United States reported. On Wednesday, it was assigned category three on the Saffir-Simpson scale.
Meteorologists expect Idalia to further strengthen to an “extremely dangerous” category four storm. It is forecast to cause a dangerous rise in ocean levels and heavy downpours.
The Gulf of Mexico, where the hurricane is raging, accounts for about 15% and 5% of all U.S. oil and gas production, respectively, according to the U.S. Department of Energy’s Energy Information Administration (EIA).
Market participants are also assessing signals about changes in energy stocks in the States and following the situation in Gabon, where a group of military officers announced the deposition of President Ali Bongo Ondimba, who has been in power for 14 years and was re-elected for a third term on Saturday.
According to the American Petroleum Institute (API), oil inventories in the States collapsed by 11.5 million barrels last week.
Official data from the U.S. Department of Energy will be released at 5:30 p.m. Wednesday. Analysts surveyed by S&P Global Commodity Insights forecast that the data will indicate a reduction in oil stocks by 5.2 million barrels, gasoline – by 600 thousand barrels, distillates – by 1.4 million barrels.
Meanwhile, analysts still see no signs of disruptions in oil production in Gabon, a member of OPEC, writes MarketWatch.
Benchmark oil prices are slightly rising on Monday morning. Last Friday, quotes rose, but ended in the red for the second week in a row.
The price of October futures for Brent on the London ICE Futures exchange at 8:19 a.m. is $84.53 per barrel, which is 5 cents (0.06%) higher than at the close of the previous session. Last Friday, these contracts rose by $1.12 (1.3%) to $84.48 per barrel.
Quotes for WTI futures for October in electronic trading on the New York Mercantile Exchange (NYMEX) by this time increased by 11 cents (0.14%) to $79.94 per barrel. At the end of the previous session, they rose by $0.78 (1%) to $79.83 per barrel.
Last week, Brent fell by 0.4% and WTI by 1%.
Oil market participants are evaluating the speech of Federal Reserve Chairman Jerome Powell at the Jackson Hole Economic Symposium. According to him, the Fed is not done fighting high inflation and may raise interest rates again if necessary.
“We stand ready to raise rates even higher if necessary, and we intend to maintain a restrictive monetary policy until we have confidence that inflation is moving steadily downward toward our target,” he said.
Meanwhile, the Chinese authorities have announced new measures to support the economy, which relate to the housing market and the stock market.
“The news of further stimulus in China has provided additional support,” said Warren Patterson of ING Groep NV. – “However, prices are likely to remain in a certain range in the short term, given the continuing concerns about shrinking demand and rising supply.
Meanwhile, data from the oilfield services company Baker Hughes showed that over the past week, the number of operating oil rigs in the United States decreased by 8 units to 512, which is the lowest since February 2022.
Oil prices rise on Friday morning, but end in the negative for the second week in a row on signals of weak demand in China and expectations of further tightening of monetary policy in the United States.
Traders’ attention on Friday is focused on Federal Reserve Chairman Jerome Powell’s speech at an economic symposium in Jackson Hole.
It is believed that he will outline in his speech what factors the Fed will consider when deciding when to finalize the rise in the benchmark interest rate and when it is time to start lowering it.
October Brent crude futures on the London-based ICE Futures exchange at 8:15 a.m. Q4 on Friday stand at $83.63 per barrel, up $0.27 (0.32%) from the previous session’s closing price. On Thursday, these contracts rose $0.15 (0.2%) to $83.36 per barrel.
The price of WTI oil futures for October at the electronic trading of the New York Mercantile Exchange (NYMEX) increased by $0.28 (0.35%) to $79.33 per barrel. At the end of previous trading, the cost of these contracts rose by $0.16 (0.2%), to $79.05 per barrel.
Since the beginning of this week, Brent has fallen in price by 1.4%, WTI – by 2.4%.
Citigroup analyst Ed Morse said in an interview with Bloomberg on Thursday that key OPEC members may have to further reduce oil production as members of the organization, who have struggled with production in recent years, have begun to ramp it up.
Iran, Iraq, Libya, Nigeria, Libya and Venezuela will increase production by a total of 900,000 barrels per day (bpd) this year and at least the same amount next year, Citi said. This will be enough to meet oil demand, Morse noted.
As a result, Saudi Arabia and a number of other states will have to further reduce production, which could become a serious problem for them, the expert said.
