MARKET WATCH: Oil prices rise on lower US inventories

Crude oil prices rose modestly to settle well above $49/bbl on the New York market Aug. 9 after the US Energy Information Administration reported the nation’s crude oil inventories fell 6.5 million bbl to 1.15 billion bbl for the week ended Aug. 4.

Crude oil prices rose modestly to settle well above $49/bbl on the New York market Aug. 9 after the US Energy Information Administration reported the nation’s crude oil inventories fell 6.5 million bbl to 1.15 billion bbl for the week ended Aug. 4.

Commercial crude inventories, excluding the Strategic Petroleum Reserve, fell to 475.4 million bbl, putting inventories in the upper half of the average range for this time of year (OGJ Online, Aug. 9, 2017).

US crude oil production fell 7,000 b/d for the week ended Aug. 4 to 9.423 million b/d. Alaska production was 378,000 b/d, down 22,000 b/d, while Lower 48 production was 9.045 million b/d, up 15,000 b/d, the Weekly Petroleum Status Report said.

The Organization of Petroleum Exporting Countries has cut production since January along with some non-OPEC producers, including Russia, in an effort to reduce ample world oil supplies and support oil prices.

On the Aug. 9 London market, the Brent October contract settled higher than the November contract in what traders call backwardation, indicating tightening supplies for immediate delivery.

“We are seeing some stock draws and a return to backwardation, which is what OPEC was looking for, so the whole rebalancing is not done, but we are in the process, which you can see in the market structure,” said Olivier Jakob, Petromatrix head of energy.

OPEC was scheduled to publish its monthly report later Aug. 10. The cartel’s production is expected to have increased with rising production from Libya and Nigeria, which are exempt from the production-cut targets cuts.

Energy prices

The September light, sweet crude contract on NYMEX rose 39¢/bbl on Aug. 9 to settle at $49.56/bbl. The October contract was up 37¢ to close at $49.72/bbl.

The NYMEX natural gas price for September gained 6¢ to $2.88/MMbtu. The Henry Hub cash gas price rose 7¢ to $2.85/MMbtu.

Heating oil for September climbed 2¢ to a rounded $1.65/gal. Reformulated gasoline stock for oxygenate blending for September edged down less than 1¢ to remain at a rounded $1.62/gal.

The Brent crude contract for October on London’s ICE was up 56¢ to $52.70/bbl. The November contract also was up 46¢ to $52.65/bbl.

The August gas oil contract fell $1.25 to $482.25/tonne. OPEC’s basket of crudes on Aug. 9 was $50.47/bbl, down 2¢.

Contact Paula Dittrick at paulad@ogjonline.com.

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