Oil Higher in Monday Trade
NEW YORK (DTN) -- New York Mercantile Exchange oil futures moved higher soon after the start of regular trade Monday morning after comments from Russia's oil minister bolstered the prospect that it would join with the Organization of Petroleum Exporting Countries in taking action to stabilize oil prices.
Russian Energy Minister Alexander Novak reportedly said today that he was consulting with oil officials from Saudi Arabia and other members of OPEC to achieve market stability.
It comes after Saudi Energy Minister Khalid al-Falih and OPEC President Mohammad bin Saleh al-Sada, who is also Qatar oil minister, said last week that OPEC and non-OPEC members would discuss the market conditions and any action that may be required to stabilize prices at an informal meeting to be held alongside the International Energy Forum conference scheduled for Sept. 26-28 in Algeria.
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These are still merely comments but they are leading speculators to increase their bets on oil, hoping OPEC and non-OPEC will reduce or freeze production and help rebalance the market this year.
Nonetheless, the Russian and Saudi Arabian comments are bullish and have triggered short-covering in the futures complex, with Russia, Saudi Arabia and the United States the world's three largest oil producers. The West Texas Intermediate crude oil contract has rallied about 8.0% since the talk about OPEC action started on Aug. 8.
However, there remains skepticism OPEC would agree to reduce output, and if they do reach an agreement, that members would stick to the deal considering their checkered history. This skepticism has limited the upside for oil futures.
OPEC has its regularly scheduled biannual summit in Vienna on Nov. 30, so any potential deal between the group and Russia to act on output would have to come at or before then, said analysts.
At last look, NYMEX September WTI crude futures were up 53cts at $45.02 bbl, off a $45.15 3-1/2 week high on the spot continuation chart. October Brent on the IntercontinentalExchange added 47cts to $47.44 bbl, edging off a $47.87 one-month spot high.
In products trade, NYMEX September ULSD futures increased 1.70cts to $1.4256 gallon, off a $1.4295 one-month spot high. NYMEX September RBOB futures contract was little changed, edging up a fractional 0.08cts to $1.3717 gallon, near a one-week spot high of $1.3824.
On Friday (8/12), Bakers Hughes Inc. reported the number of rigs drilling for oil and gas in the United States increased for a seventh straight week, with the number of active oil rigs up 15 at 396. The International Energy Agency's Oil Market Report for August released Aug. 11 was bearish last week, cutting its global demand forecast for 2017 while saying July OPEC supply was up 150,000 bpd to a 33.39 million bpd eight-month high.
George Orwel can be reached at rgeorge.orwel@dtn.com
(CZ)
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