MARKET WATCH: Brent crude for November climbs above $64/bbl

Brent crude oil for November delivery climbed above $64/bbl Sept. 19 on the London market while light, sweet crude oil for November held above $58/bbl in New York.

Brent crude oil for November delivery climbed above $64/bbl Sept. 19 on the London market while light, sweet crude oil for November held above $58/bbl in New York.

Saudi Energy Minister Prince Abdulaziz bin Salman Arabia expects full oil production will be restored by Sept. 30 after an unmanned aircraft attack that temporarily halted 5.7 million b/d of production (OGJ Online, Sept. 18, 2019).

More than half of that production has been restarted, the Saudis have said. Saudi production capacity is expected to be partly restored to 11 million b/d by the end of September and fully restored to 12 million b/d by the end of November.

Analysts question whether the attacks could limit Saudi Arabia’s spare capacity, a cushion for oil markets in any unplanned outage. Tensions have escalated as US and Saudi Arabia blame the attacks on Iran.

Gene McGillian, vice-president of market research at Tradition Energy in Stamford, Conn., told Reuters, “The Saudi oil industry could be threatened again, and we could see more supply disruption from the Persian Gulf.”

McGillian said, “What’s hanging over the market’s head is the response that may be coming. How will the US and Saudi Arabia respond to this?”

Amarpreet Singh of Barclays Commodities Research said exports likely will not be impacted significantly because the Saudis hold large amounts of crude oil and petroleum products in storage.

Statistics indicate Saudi Arabia held about 35 days of the country’s total crude oil and net product exports.

Petro-logistics reported normal operations at two of Saudi Arabia’s largest crude oil export terminals, Ras Tanura and Juaymah.

“Yet there are implications for oil prices,” Singh said, adding, “Although Saudi Arabia's oil exports will likely not be impacted materially and the release of strategic reserves will likely offset any shortfall, the event may still aggravate the near-term deficit in oil market balances and reduce the inventory and spare capacity cushion, which plays a key role in price formation.”

Energy prices

Light, sweet crude oil prices on the New York Mercantile Exchange for October delivery gained 2¢ to $58.13/bbl on Sept. 19 while the November contract added 15¢ to $58.19/bbl.

The October gas price decreased 10¢ to settle at a rounded $2.54/MMbtu on Sept. 19.

Ultralow-sulfur diesel for October added 3¢ to $2/gal. The NYMEX reformulated gasoline blendstock for October gained nearly 4¢ to a rounded $1.70/gal.

Brent crude for November rose 80¢ to $64.60/bbl. The December contract increased 67¢ to settle at $63.33/bbl.

Gas oil for October gained $4.75 to $615.75/tonne on Sept. 19.

The average for the Organization of Petroleum Exporting Countries’ basket of crudes for Sept. 19 was $64.39/bbl, down 16¢.

Contact Paula Dittrick at paulad@endeavorb2b.com.

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