Oil rises a second day amid signs U.S. crude supplies falling
Mark Shenk and Rakteem Katakey, Bloomberg
11:11 AM, E.T. | September 16, 2015
11:11 AM, E.T. | September 16, 2015
Oil advanced for a second day after an industry report showed U.S. crude inventories declined.
U.S. stockpiles fell by 3.13 million barrels last week, the American Petroleum Institute was said to have reported late Tuesday. Investors are weighing the possible impact of Thursday’s Federal Reserve policy decision on the oil market. OPEC-member Venezuela’s proposals for an oil-producers summit are advancing, Foreign Minister Delcy Rodriguez said after talks with Saudi Arabian officials.
Oil has fluctuated since slumping below $40 a barrel last month as concern that China’s growth was slowing fueled volatility in markets. Prices in New York are down about 25 percent from this year’s closing peak in June amid a global glut that Goldman Sachs Group Inc. estimates is even bigger than it first thought. Saudi Arabia, the U.S. and Russia are all pumping near-record volumes of oil.
“We will have to see if the surge on yesterday’s API report holds once today’s data is released,” Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $3.4 billion, said by phone. “Everything is up in the air because of tomorrow’s Fed announcement. If they raise rates, which I think is likely, it will be bearish for oil because it will strengthen the dollar.”
Price Gains
West Texas Intermediate for October delivery rose $1.35, or 3 percent, to $45.94 a barrel at 9:50 a.m. on the New York Mercantile Exchange. Prices are down 14 percent this year.
Brent for November settlement climbed $1.52, or 3.2 percent, to $49.27 a barrel on the London-based ICE Futures Europe exchange. The October contract expired Tuesday.
Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI contracts and the biggest oil-storage hub in the U.S., declined by 1.5 million barrels through Sept. 11, the API in Washington reported, according to ForexLive and a person familiar with the numbers.
The Energy Information Administration is forecast to report a 2 million-barrel increase nationwide last week, according to a Bloomberg survey. This would be the third weekly gain, keeping inventories more than 100 million barrels above the five-year average.
Shale Slowdown
The U.S. shale boom is likely to slow “considerably” on low oil prices, Fatih Birol, executive director at the International Energy Agency, said in an interview in Tokyo on Wednesday. U.S. shale oilproduction will drop 9 percent in 2016 as crude below $50 a barrel “slams brakes” on years of supply growth, the IEA said in a separate monthly market report Sept. 11.
“U.S. producers will need to scale back production with oil at these levels and that will stabilize prices,” Jens Pedersen, a Copenhagen-based commodities analyst at Danske Bank A/S, said by phone. “The market will keep an eye on the inventory data today and also look for signs of stronger demand from China in the weeks ahead.”
Venezuela is seeking a fair price for oil that will support economic growth and energy demand, OilMinister Eulogio Del Pino said in an interview at Tuesday’s meeting between Venezuela and Saudi Arabian officials in Caracas. Venezuela suggested a price floor for oil that would be analyzed every quarter, he said.
U.S. stockpiles fell by 3.13 million barrels last week, the American Petroleum Institute was said to have reported late Tuesday. Investors are weighing the possible impact of Thursday’s Federal Reserve policy decision on the oil market. OPEC-member Venezuela’s proposals for an oil-producers summit are advancing, Foreign Minister Delcy Rodriguez said after talks with Saudi Arabian officials.
Oil has fluctuated since slumping below $40 a barrel last month as concern that China’s growth was slowing fueled volatility in markets. Prices in New York are down about 25 percent from this year’s closing peak in June amid a global glut that Goldman Sachs Group Inc. estimates is even bigger than it first thought. Saudi Arabia, the U.S. and Russia are all pumping near-record volumes of oil.
“We will have to see if the surge on yesterday’s API report holds once today’s data is released,” Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $3.4 billion, said by phone. “Everything is up in the air because of tomorrow’s Fed announcement. If they raise rates, which I think is likely, it will be bearish for oil because it will strengthen the dollar.”
Price Gains
West Texas Intermediate for October delivery rose $1.35, or 3 percent, to $45.94 a barrel at 9:50 a.m. on the New York Mercantile Exchange. Prices are down 14 percent this year.
Brent for November settlement climbed $1.52, or 3.2 percent, to $49.27 a barrel on the London-based ICE Futures Europe exchange. The October contract expired Tuesday.
Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI contracts and the biggest oil-storage hub in the U.S., declined by 1.5 million barrels through Sept. 11, the API in Washington reported, according to ForexLive and a person familiar with the numbers.
The Energy Information Administration is forecast to report a 2 million-barrel increase nationwide last week, according to a Bloomberg survey. This would be the third weekly gain, keeping inventories more than 100 million barrels above the five-year average.
Shale Slowdown
The U.S. shale boom is likely to slow “considerably” on low oil prices, Fatih Birol, executive director at the International Energy Agency, said in an interview in Tokyo on Wednesday. U.S. shale oilproduction will drop 9 percent in 2016 as crude below $50 a barrel “slams brakes” on years of supply growth, the IEA said in a separate monthly market report Sept. 11.
“U.S. producers will need to scale back production with oil at these levels and that will stabilize prices,” Jens Pedersen, a Copenhagen-based commodities analyst at Danske Bank A/S, said by phone. “The market will keep an eye on the inventory data today and also look for signs of stronger demand from China in the weeks ahead.”
Venezuela is seeking a fair price for oil that will support economic growth and energy demand, OilMinister Eulogio Del Pino said in an interview at Tuesday’s meeting between Venezuela and Saudi Arabian officials in Caracas. Venezuela suggested a price floor for oil that would be analyzed every quarter, he said.
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