The light, sweet crude oil price for October delivery gained modestly on Aug. 26 to settle above $47.60/bbl on the New York market upon uncertainty about a possible increase in US interest rates. But crude prices fell in early trading Aug. 29.
Federal Reserve Chair Janet Yellen on Aug. 26 gave a speech suggesting she is becoming increasingly convinced that the central bank will raise short-term interest rates although the timing remains unclear. Interest rates might be raised as early as sometime in September.
Oil is traded in US dollars. Higher interest rates could strengthen the dollar, making oil more expensive for oil traders using different currencies.
“A much stronger US dollar is causing selling pressure today,” Commerzbank analysts said in a research note. “Speculative financial investors in particular are likely to use this as an opportunity to take profits.”
Members of the Organization of Petroleum Exporting Countries have said they will have an informal meeting Sept. 26-28 to discuss oil prices. The OPEC talks are planned on the sidelines of an energy conference in Algeria.
Barclays issued a research note saying, “OPEC seems to have learned from its first-quarter experience when, despite poor fundamentals, talk of a supply freeze kick-started a 30% rally in oil prices.” OPEC and non-OPEC members discussed a production freeze in April but no agreement was reached.
“We see the outcome of the oil freeze talks in Algeria as having a limited impact on oil-market balances. Rather than the outcome of the meeting, we see incoming oil-market data (both demand and supply) as a source for price strength in the fourth quarter,” Barclays analysts said.
Energy prices
The NYMEX crude oil contract for October delivery gained 31¢ to close at $47.64/bbl on Aug. 26. The November contract was up 30¢ to $48.33/bbl.
The natural gas contract for September climbed 2.5¢ to a rounded $2.87/MMbtu. On the spot market, the Henry Hub gas price gained 1¢ to $2.87/MMbtu.
Heating oil for September declined 1¢ to a rounded $1.50/gal. The price for reformulated gasoline stock for oxygenates blending for September edged up less than a penny to remain at a rounded $1.51/gal.
The Brent crude contract for October on London’s ICE gained 25¢ to settle at $49.92/bbl. The contract for November was up 23¢ to $50.15/bbl. The September gas oil contract settled at $437.75/tonne on Aug. 26, up 50¢.
The average price for OPEC’s basket of 12 benchmark crudes was $45.75/bbl on Aug. 26, up 47¢.
Contact Paula Dittrick at [email protected].