As of 16:52 BST front month Brent crude oil futures were near their best levels of the day, gaining 1.463% to $49.89 per barrel on the ICE. For more on prices, read part one of this series.
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A report from Reuters on Tuesday suggested that OPEC member Iran may join a global contingency of producers in freezing crude output at next month’s International Energy Forum in Algiers, Algeria. With more US oil flooding the market, there’s a risk of a larger supply glut and a return to weaker prices. Now, prices are once again testing $50, but the rally has lost momentum as disrupted supplies from Nigeria and Iraq threaten to come back online.
West Texas Intermediate (WTI) crude September futures on NYMEX stood at $46.78 per barrel, facing a decrease of 1.3 percent. Del Pino was in Tehran on August 15 before flying to Jeddah in Saudi Arabia. “A production freeze would also likely prove self-defeating if it succeeded in supporting oil prices further, with the United States oil rig count up 28 per cent since May”.
OPEC production freeze or not, the oil market is not going to recover anytime soon as troubled oil-producing nations prepare to ramp up production and pave the way for hundred of thousands of barrels to be released into the already oversupplied market, Goldman Sachs warns. Analysts polled by S&P Global Platts are looking for an increase of 200,000 barrels for crude stockpiles and a drop of 1.6 million for gasoline supplies in the week ended August 19.
Goldman Sachs forecast $45-$50 for a barrel of oil through summer 2017, maintaining its view of weak fundamentals in the near term.
Iraq’s newly installed Oil Minister Jabbar Al-Luaibi called on companies to increase oil and gas production to boost national revenue, according to an e-mailed statement from the Oil Ministry on Tuesday.
“But, there has been a bearish fundamental shift in recent weeks as more rigs continue to come online in the USA, and weekly production declines very well may have reversed to increases”, they said.
October futures fell as much as 1.7% in NY after declining for the first time in eight days on Monday.
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“We’re expecting the availability of crude supply to improve, causing a counter-seasonal build in inventories in the second half”, said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. Total volume traded was 22 percent above the 100-day average. The global benchmark crude traded at a $1.85 premium to WTI. Crude and motor-fuel inventories are still at their highest seasonal level in at least two decades.
