Light, sweet crude oil and Brent crude oil prices jumped by more than $1.60/bbl on Sept. 11 while market participants monitored tropical weather systems headed toward the US East Coast and possibly the Gulf of Mexico.
Tropical Storm Isaac could aim at Texas later this week although that system appeared to be fading as of early Sept. 12, forecasters said. A tropical disturbance called 95L tracked toward the Texas coast, probably the Corpus Christi area, on Sept. 12.
The disturbance already prompted heavy rain along some parts of the Texas coast. Hurricane Florence is expected to miss major refineries and production areas as it heads toward the Carolinas.
Separately, the Organization of Petroleum Exporting Countries on Sept. 12 reported secondary sources estimate cartel oil production rose month-on-month by 278,000 b/d in August. OPEC’s Monthly Oil Market Report said higher production from Libya, Iraq, and Nigeria primarily was responsible for the overall increase.
Secondary sources also said Saudi Arabia’s production rose by 38,000 b/d, but the Saudis told OPEC directly that its production rose by 124,000 b/d in August compared with July.
Higher OPEC production follows a decision in late June by OPEC and some non-OPEC producers to comply by no more than 100% with production-cut targets effective since Jan. 1, 2017.
The decision meant OPEC and some non-OPEC producers, including Russia, collectively begin ramping up production by up to an estimated 1 million b/d.
Previously, the producers’ alliance set and then extended production-cut targets of 1.8 million b/d in efforts to reduce ample world oil supplies. Oil prices had slumped starting in late 2014. Production cuts helped boost crude prices by more than 50% since January 2017.
June’s decision to increase production helped reduce oil prices after Brent crude oil reached above $80/bbl in May. Brent prices spiked after US President Donald Trump announced a US exit from an international agreement that lifted oil sanctions against Iran in return for its cooperation regarding its nuclear program.
New unilateral US oil sanctions against Iran become fully effective in early November.
On Sept. 12, OPEC cited secondary sources as saying Iran’s crude production fell by 150,000 b/d in August compared with July.
Energy prices
The light, sweet crude contract for October delivery on the New York Mercantile Exchange increased $1.71 to $69.25/bbl on Sept. 11. The November contract jumped $1.63 to settle at $69.04/bbl.
The NYMEX natural gas price for October rose 2¢ to a rounded $2.83/MMbtu. The Henry Hub cash gas was $2.89/MMbtu, up 4¢.
Ultralow-sulfur diesel for October gained 3¢ to a rounded $2.25/gal. The NYMEX reformulated gasoline blendstock for October rose 5¢ to a rounded $2.01/gal.
Brent crude oil for November increased $1.69 to $79.06/bbl on London’s International Commodity Exchange. The December contract gained $1.64 to $78.56/bbl. The gas oil contract for October was $690.25/tonne.
OPEC’s basket of crudes for Sept. 11 averaged $76.02/bbl, up 82¢.
Contact Paula Dittrick at [email protected].
