The light, sweet crude oil price for September delivery climbed $1.25 on the New York market Aug. 15 to $45.74/bbl, marking the highest front-month contract price since July 15. Oil prices have gained for three consecutive sessions on both the New York and London markets.
Price support continued as Russian Energy Minister Alexander Novak said he was consulting with Saudi Arabia and other producers about oil-price stability.
Ole Hansen, Saxo Bank head of commodities strategy, said recent comments from the Saudis had supported oil prices but he doubts that the Organization of Petroleum Exporting Countries will agree to any production freeze proposal.
OPEC members have said they will meet for informal talks in Algeria during September on the sidelines of another meeting. The next formal OPEC meeting is scheduled for Nov. 30.
“What the Saudis actually succeeded in doing was to influence market sentiment and thereby force a reduction of what was a rapidly expanding speculative short position in the futures market,” Hansen said.
Saudi Energy Minister Kahlid al-Falih last week said the kingdom might be willing to discuss production limits. He said OPEC and major non-OPEC producers would cooperate “if there is a need to…help the market rebalance.” Oil prices have climbed since then (OGJ Online, Aug. 15, 2016).
Hansen noted that refinery demand typically slows in August and especially September, which can result in rising oil supplies that in turn discourages oil-price recovery.
“By preempting these developments, a better sentiment has been engineered,” Hansen said. “The fear of freeze action will potentially be enough to dissuade traders from going aggressively short into September, a month where oil has fallen for the past 5 years.”
Separately, Iran officials said they have made no decision about joining the informal OPEC talks in September.
The NYMEX crude oil contract for October climbed $1.22 to close at $46.40/bbl.
The natural gas contract for September rose by a fraction of a penny to a rounded $2.59/MMbtu. On the spot market, the Henry Hub gas price rose 1¢ to $2.71/MMbtu on Aug. 13.
Heating oil for September gained 4¢ to a rounded $1.45/gal. The price for reformulated gasoline stock for oxygenates blending for September edged up by nearly 3¢ to a rounded $1.40/gal.
The Brent crude contract for October on London’s ICE rose $1.38 to $48.35/bbl. The contract for November was up $1.35 to $48.61/bbl. The September gas oil contract settled at $422.50/tonne on Aug. 15, up $13.
The average price for OPEC’s basket of 12 benchmark crudes was $43.92/bbl on Aug. 15, up $1.32.