Light, sweet crude oil prices fell to settle under $47/bbl on the New York market Aug. 30 while front-month Brent crude oil prices also fell modestly to hover around $48/bbl on what analysts call uncertainty about a proposed production freeze by major producers.
Both benchmarks settled at their lowest levels Aug. 30 since Aug. 15. The US Energy Information Administration was scheduled to release its weekly oil and product inventory report Aug. 31 for the week ended Aug. 26.
Members of the Organization of Petroleum Exporting Countries plan to talk informally in late September about oil prices. Those talks will be in Algeria on the sidelines of another energy conference. Similar talks between OPEC members and non-OPEC producers in April failed to result in any agreement.
Iraqi Prime Minister Haider ah-Abadi said Aug. 30 that Iraq supports a production limit. Previously, Iraq was considered an impediment to any production limit.
But analysts remain doubtful that any production limit agreement will be reached. Iran repeatedly has said it will continue increasing production now that international sanctions have been lifted. Without Iran’s participation, Saudi Arabia is unlikely to agree to a production freeze pact.
Barclay’s analyst Miswin Mahesh said in a research note that Barclays believe the market is rebalancing.
“A constructive oil market balance is emerging for fourth quarter and 2017, where our balances show the first stock draws in several quarters,” Mahesh said. “An even tighter balance than we forecast is likely if the past serves as precedent.”
Barclays said its outlook does not include any production freeze agreement.
“Iran remains some distance away from its pre-sanctions level, meaning producers will have difficulty agreeing to a freeze at the end of September,” Mahesh said. “Even if key producers freeze, it would not cap exports and would do little more than officialize producer plans for the balance of the year.”
Energy prices
The NYMEX crude oil contract for October declined 63¢ to close at $46.35/bbl on Aug. 30. The November contract was down 66¢ to $46.99/bbl.
The natural gas contract for October dropped nearly 7¢ to a rounded $2.83/MMbtu. On the spot market, the Henry Hub gas price fell 3¢ to $2.92/MMbtu.
Heating oil for September declined 1.5¢ to a rounded $1.47/gal. The price for reformulated gasoline stock for oxygenates blending for September dropped nearly 2¢ to $1.45/gal.
The Brent crude contract for October on London’s ICE dropped 89¢ to settle at $48.37/bbl. The November contract fell 72¢ to $48.73/bbl. The September gas oil contract settled at $428/tonne on Aug. 30, down $2.75.
The average price for OPEC’s basket of 12 benchmark crudes was $45.25/bbl on Aug. 30, up 19¢.
Contact Paula Dittrick at [email protected].