WTI Crude
58.69
Brent Crude
64.03
Natural Gas
3.08

Oil futures up over 3% as bets tilt in favor of an OPEC output deal

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Written by Myra P. Saefong and Jenny W. Hsu

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Crudeoil futures rebounded Monday, tacking on more than 3%, as traders placed their latest wagers on the possibility that major producers will make progress this week on a pact to limit production.

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November West Texas Intermediate crude CLX6, -2.85% climbed $1.45, or 3.3%, to settle at $45.93 a barrel on the New York Mercantile Exchange, after losing about 4% in Friday’s session.

November Brent crude LCOX6, -2.79% the global oil benchmark, rose $1.46, or 3.2%, to $47.35 a barrel on London’s ICE Futures exchange.

“It will be very hard to see through the market noise in the front half of this week, but some key levels to watch are $43 and $48/barrel in WTI futures as those areas have been the ‘bookends’ on the market for all of September,” Tyler Richey, co-editor of The 7:00’s Report, told MarketWatch.
Algeria’s Energy Minister Noureddine Boutarfa said in an interview with Bloomberg Sunday that the most important thing is to stabilize the oil market. He also said that several scenarios will be studied, including scenarios for an output cut and a freeze.

Oil prices sank Friday after Saudi Arabia said it didn’t expect the Organization of the Petroleum Exporting Countries and other prominent non-cartel producers, such as Russia, to clinch a deal on Wednesday when they meet on the sidelines of an energy conference in Algeria.

“The market will remain sensitive to any comments from major players like Saudi Arabia, Iran, and Russia while ‘smaller fish’ such as Venezuela and Libya can largely be ignored because they are prone to making fairly ‘desperate’ claims to try to rally the market, said Richey.

“If the meeting turns out to be a disappointment, focus will return to U.S. data as the long-term and near-term outlooks based on recent data are conflicting,” he said. “Near term, the largest three week draw since summer of 2013 has been bullish while longer term, stabilizing oil production in the U.S. has put a damper on estimates as to when the production surplus will come into balance.”

Analysts, meanwhile, believe that OPEC is increasing pressure to take action to support prices.

“Whichever way you slice it, OPEC has to cut production or else the market will not draw down the overhang accumulated over 2014 and 2015 even next year,” said consultancy Energy Aspects.

OPEC’s monthly report in August noted non-OPEC supply will likely rise by 350,000 barrels a day in 2017, an upward revision from the previous estimate due to the stronger-than-expected resilience from the U.S. shale producers. According to industry group Baker Hughes BHI, -2.78% the number of rigs drilling for oil in the U.S. rose by 2 to 418 in the week ended Sept. 16.

For more than two years, global oil markets have been beleaguered by oversupply that has kept prices below $100. As major producers continue to prioritize market share over prices, some analysts don’t expect to see a deal this week. OPEC has already failed at several attempts to impose some sort of production cap this past year.

“Once bitten, twice shy. We have been burned before and we are not seeing any solid evidence that this time they will agree to a deal,” said Ben Le Brun, a market analyst at the Australia-based optionsXpress. “We are all approaching this meeting with caution.”

Back on Nymex, other energy futures climbed along with oil. October gasoline RBX6, -1.96%  tacked on 2.6 cents, or 1.9%, to $1.402 a gallon, while October heating oil HOV6, -2.71%  added 4.2 cents, or 3%, to $1.449 a gallon.

October natural gas NGV16, -0.10%  ended at $2.997 per million British thermal units, up 4.2 cents, or 1.4%.


TAGS: Oil, Crude, West Texas


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Written by: Myra P. Saefong and Jenny W. Hsu

Click HERE to Read Article From Publisher

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