Recap: Oil prices rose more than 2% on Tuesday on rising concern that OPEC would not be able to ramp up output in time to make up for the shortfalls from Iran, which is set to receive a new round of U.S. sanctions. WTI rose to a high of $70.42 a barrel, while Brent peaked the session at $79.73 a barrel. With trade wars between the U.S. and China working to keep a lid on prices, gains were pared. October WTI settled at $69.85 a barrel, up 94 cents, or 1.36%, while Brent added 98 cents, or 1.26%, to settle at $ 79.03 a barrel.
October RBOB rose 2.81 cents, to settle at $2.0049 a gallon, while October heating oil tacked on 2.93 cents to settle at $2.2357 a gallon.
Fundamental News: The EIA reported that oil production in the largest US shale field will increase next month at the lowest level since late 2016 as transport limits erode gains. Operators will produce an additional 31,000 bpd in October in the Permian Basin of West Texas and New Mexico, bringing its total output to 3.46 million bpd. Meanwhile, the number of drilled-but-uncompleted wells in the Permian Basin will increase by 211 to 3,630.
Ministers from OPEC and non-OPEC producers are scheduled to meet on Sunday to discuss compliance with output policies. OPEC sources have stated that no immediate action was planned and that producers would discuss how to share a previously agreed output increase. Saudi sources have stated that Saudi Arabia was comfortable with prices above $80/barrel, at least for the short-term.
OPEC Secretary General, Mohammad Barkindo, said that OPEC and non-OPEC countries aim to agree on a framework for long-term cooperation by December, when the oil producers plan to meet in Vienna. He said oil producers will discuss the best mechanism to adopt to ensure they reach 100% compliance with crude supply targets during their meeting in Algeria on September 23rd.
Russia’s Energy Minister, Alexander Novak, said an oil price between $70 and $80 was temporary and sanctions-driven, adding that the long-term price would stand around $50/barrel. He also stated that Russia’s oil production in 2018 is expected to total 553 million tons or 11.105 million bpd and that production would increase to 570 million tons in 2021. Russia increased its output to 11.21 million bpd in August, up from 11.066 million bpd produced in June.
An adviser to Iran’s Oil Minister, Moayyed Hosseini Sadr, said that expected US sanctions on Iran’s energy sector could not reduce the country’s oil sale to zero because of high demand levels in the market.
According to the Joint Organizations Data Initiative, Saudi Arabia’s crude output in July fell by 201,000 bpd on the month to 10.288 million bpd. Its crude exports fell by 120,000 bpd on the month to 7.12 million bpd in July.
The Buzzard oilfield in the North Sea restarted on Monday. The field was resuming production later than initially planned following maintenance that started in early September. The Buzzard oilfield produced almost 120,000 bpd on Monday.
The Unite union in Scotland on Tuesday welcomed a decision by Shell to move to two weeks offshore and three weeks onshore schedules for workers in the British North Sea. Shell will switch to a less tiring rota system for its offshore workers in the North Sea as Total has faced strike action over plans to have workers spend more days offshore. Workers at three of Total’s offshore platforms in the North Sea have held strikes over the group’s plans to introduce a rota that would require them to stay offshore for three weeks and onshore for three weeks.
Early Market Call – as of 8:05 AM EDT
WTI – Oct $69.91, up 7 cents
RBOB – Oct $2.0084, up 33 points
HO – Oct $2.2278, down 75 points
View the Sprague Refined Products Market Watch Report in a downloadable pdf format by clicking below.
Click to view more online:
View market updates
View our refined products glossary
Go to SpraguePORT online
