MARKET WATCH: NYMEX, Brent crude oil prices both surge in one-day rally

The crude oil price for October delivery settled up nearly $4/bbl on the New York market Aug. 27, marking its biggest single-day gain in more than 5 years. Brent crude oil prices on the London market leaped by more than $4/bbl, marking Brent’s biggest single-day rise since December 2008.
Aug. 28, 2015
2 min read

The crude oil price for October delivery settled up nearly $4/bbl on the New York market Aug. 27, marking its biggest single-day gain in more than 5 years. Brent crude oil prices on the London market leaped by more than $4/bbl, marking Brent’s biggest single-day rise since December 2008.

Analysts largely attributed the sudden rally in oil prices to traders making purchases for short covering on light, sweet crude oil-related futures and options. Hedge funds and other money managers held more short positions than normal because of falling oil prices in past months.

US Commodity Futures Trading Commission records showed that since about June 15, hedge funds had accumulated one of the biggest short positions in crude oil on record, equivalent to almost 160 million bbl, Reuters reported.

World oil markets also were supported after the Wall Street Journal reported Venezuela requested an emergency meeting of members of the Organization of Petroleum Exporting Countries in coordination with Russia.

Before the oil price escalation, J. Marshall Adkins of Raymond James & Associates Inc. in Houston issued an Aug. 27 analyst note saying, “After a tumultuous week and surrendering the gains made over the past year, the US equities market showed signs of a rebound” while “unemployment remains relatively low.” The Chinese stock market also rebounded.

On US markets, Adkins noted energy-associated equities also got support, particularly some service companies and some exploration and production companies.

Energy prices

The October crude oil contract on the New York Mercantile Exchange soared $3.96 to $42.56/bbl Aug. 27 while the November crude oil contract gained $4 to $43.37/bbl. The jump in front-month prices marked the biggest jump in a single trading session since March 2009.

The natural gas contract for September declined 5.5¢ to a rounded $2.64/MMbtu. The Henry Hub, La., gas price dropped 4¢ to $2.68/MMbtu.

Heating oil for September delivery gained 11¢ to a rounded $1.50/gal. The price for reformulated gasoline stock for oxygenates blending for September was up 10¢ to a rounded $1.46/gal.

The October ICE contract for Brent crude escalated by $4.42 to $47.56/bbl, and the November contract climbed $4.43 to $48.36/bbl. The ICE gas oil contract for September climbed $21 to $445.75/tonne.

The average price for the OPEC basket of 12 benchmark crudes rose $1.86 to $42.37/bbl on Aug. 27.

Contact Paula Dittrick at [email protected].

*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.

About the Author

Paula Dittrick

Senior Staff Writer

Paula Dittrick has covered oil and gas from Houston for more than 20 years. Starting in May 2007, she developed a health, safety, and environment beat for Oil & Gas Journal. Dittrick is familiar with the industry’s financial aspects. She also monitors issues associated with carbon sequestration and renewable energy.

Dittrick joined OGJ in February 2001. Previously, she worked for Dow Jones and United Press International. She began writing about oil and gas as UPI’s West Texas bureau chief during the 1980s. She earned a Bachelor’s of Science degree in journalism from the University of Nebraska in 1974.

Sign up for Oil & Gas Journal Newsletters