Oil futures ended on a mixed note Tuesday 20 September, with Brent crude modestly lower but West Texas Intermediate crude slightly higher, as traders weighed the possibility of a crude output deal following reports that Russia supports a one year pact to stabilise prices.
However, weekly data expected to show the first increase in U.S. crude supplies in three weeks and a substantial slide by gasoline futures, with a major gasoline pipeline expected to return to operation on Wednesday, kept prices in check.
October West Texas Intermediate crude rose by 14 cents, or 0.3%, to settle at US$43.44/bbl on the New York Mercantile Exchange on the contract’s expiration day. The November WTI contract, which became the front month, added 19 cents, or 0.4%, to US$44.05.
However, November Brent crude on the ICE Futures exchange in London lost 7 cents, or less than 0.2%, to finish at US$45.88/bbl.
On Tuesday afternoon, a Russian oil official told state news agency Interfax that Russia supports a year long deal to co-operate with the Organisation of the Petroleum Exporting Countries. The comments shifted expectations back toward the likelihood of a production agreement at next week’s gathering of major oil producers who are expected to discuss ways to stabilise the market.
“If the market is rallying on comments out of Russia, it just further affirms how ludicrous the current environment is,” Matt Smith, Director of Commodity Research at ClipperData, told MarketWatch. “After all, the Russian energy ministry just announced how output in September has just reached a new post-Soviet era high at over 11 million bpd.”
Meanwhile, news reports say that OPEC members Nigeria, Libya and Venezuela are eager to ramp up oil exports.
Bjarne Schieldrop from Sweden’s SEB bank said that the moves from the three nations are a clear message that none would be interested in agreeing to cap production at current levels when they meet in Algeria on 28 September.
He added that any deal would probably have a caveat allowing Nigeria, Libya and Venezuela as well as Iran to lift production levels if they can, meaning that any pact would still result in higher production from OPEC.
The expiration of the October WTI futures contracts at the day’s settlement, upcoming weekly US petroleum inventory data and news that a major gasoline pipeline will soon be restarted also influenced prices for oil.
“We have some contract-expiry volatility to shake things up today, while inventories data lurks again,” Smith said in an earlier note. “The Colonial Pipeline complications of the past week should have a significant impact on a number of aspects of the report.”
On Tuesday 20 September, Colonial Pipeline said that it has completed construction of a bypass segment around the Alabama leak site of its Line 1 pipeline, which had been shut since 9 September when the leak was discovered. The company expects to restart Line 1 on Wednesday, but also said it would take several days for the fuel delivery supply chain to return to normal.
Edited from source by Stephanie Roker
Read the article online at: https://www.worldpipelines.com/special-reports/22092016/data-shows-oil-futures-after-expected-pipeline-reopens/