The light, sweet crude oil contract for November delivery dropped slightly but settled above $50/bbl on Sept. 21 pending a Sept. 22 meeting in Vienna during which representatives of the Organization of Petroleum Exporting Countries and Russia were expected to discuss production levels.
Before the meeting, Nigerian Minister of State for Petroleum Emmanuel Ibe Kachikwu discussed the possibility of extending the existing production-cut targets again.
An agreement, which became effective in January, calls for production-cut targets of 1.8 million b/d total, of which OPEC accounts for 1.2 million b/d.
“OPEC members are trying to target a figure of close to $60/bbl. We’re not too far away from that,” Kachikwu told Bloomberg television. “If we get to March and find that there’s a need to do more, I think we will.” The agreement is set to expire after first-quarter 2018.
Nigeria, exempted from the production cut deal, also has signaled a willingness to cap its output once production stabilizes at 1.8 million b/d.
Goldman Sachs analysts said, “While participants have commented on the possibility of an extension of the cuts, there appears to be no commitment from the largest producers,” which are Saudi Arabia, Kuwait, and Russia.
Typically, OPEC and non-OPEC participants wait until closer to an actual expiration date before taking action, said Goldman Sachs analysts. They expected the Brent price to reach $58/bbl by Dec. 31. Brent for November delivery closed above $56/bbl on the London market Sept. 21.
Commerbank analysts said oil prices also are being supported in advance of a Sept. 25 Kurdish independence referendum.
Oil-rich Kirkuk province in Iraq is one region scheduled to vote on its independence. The referendum outcome could cause disruptions to the oil infrastructure. “Unrest cannot be ruled out,” said Commerzbank analysts.
Energy prices
The November light, sweet crude contract on the New York Mercantile Exchange decreased 14¢ to settle at $50.53/bbl on Sept. 21. The December contract fell 11¢ to settle at $50.93/bbl.
The NYMEX natural gas price for October fell nearly 15¢ to $2.95/MMbtu. The Henry Hub cash gas price fell 3¢ to $3.11/MMbtu.
Heating oil for October edged up nearly 1¢ to a rounded $1.81/gal. The NYMEX reformulated gasoline blendstock for October dropped a penny to $1.64/gal on Sept. 21.
The Brent crude contract for November on London’s ICE gained 14¢ to $56.43/bbl. The December contract increased 16¢ to $56.09/bbl. The gas oil contract for October was $541.25/tonne, up $4.25.
OPEC’s basket of crudes for Sept. 21 was $54.59/bbl, up 53¢.
Contact Paula Dittrick at [email protected].
