OPEC chatter pushes oil prices back into rally mode

A drilling forecast from the United States shows shale momentum will continue, expect for parts of the country hit by Hurricane Harvey.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |   Sept. 19, 2017 at 9:32 AM
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Sept. 19 (UPI) -- Short-term disruptions and lower exports from OPEC members offset signs of stronger U.S. oil production to help give crude oil prices a lift early Tuesday.

Crude oil prices have been volatile, but moving generally higher for most of the month. Seasonal supply and demand factors that would normally push oil prices lower were delayed by Hurricanes Harvey and Irma in the United States. Gulf Coast refineries were shut down because of Harvey, which complicated market pressures because of the supply strains in Florida because of Irma.

About 2 percent of the nation's total refining capacity is still offline because of the impact from Harvey. Oil prices were uneven in Monday trading as the U.S. energy sector normalized in the wake of the hurricanes. A productivity report from the U.S. Energy Information Administration, meanwhile, forecast modest gains from most shale oil basins in the country, except for the Eagle Ford and Permian basins that were in the path of Hurricane Harvey.

Traders are looking ahead to a late September meeting of a committee monitoring the impacts of an effort led by the Organization of Petroleum Exporting Countries to balance the market with coordinated production declines.

An emailed report from London oil broker PVM said short-term bullish pressures were apparent, meanwhile, in outages from Nigeria and Saudi Arabia.

"It was due to Shell declaring force majeure on Nigeria's Bonny Light deliveries as the Nembe Creek pipeline had to be shut down," the report read. "Joint Organizations Data Initiative showed an almost 200,000 barrel-per-day monthly decline in Saudi July crude oil exports, showing determination from the Kingdom to make the supply cut deal work."

The price for Brent crude oil, the global benchmark, was up 0.34 percent at 9:03 a.m. EDT to $55.68 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.6 percent to $50.21 per barrel, a move about the psychological threshold of $50 per barrel for the second time this quarter.

Iraqi Oil Minister Jabbar al-Luaibi added support for the bullish sentiment from the sidelines of an energy conference in the United Arab Emirates. The minister said Iraq and some of the other OPEC members were considering deeper cuts to help address supply-side pressures. He was quoted by Bloomberg as saying, however, that "no firm decision" was made yet.

The International Energy Agency reported last week that OPEC production was already on the decline and the level of stocks for members of the Organization for Economic Cooperation and Development was only slightly above the five-year average.

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