Oil rises 1% on settlement amid fears of supply shortages

[Adam Montana]

Published: May 19, 2017 6:12 a.m. ET

AFP/Getty Images

Saudi Arabia's minister of energy Khalid A Al-Falih in Vienna, on June 2, 2016.

By

SARASJOLIN

MARKETS REPORTER

 

BIMANMUKHERJI

 

Oil futures moved sharply higher on Friday, as investors showed some optimism about what will come out of next week’s meeting of the Organization of the Petroleum Exporting Countries.

Up for final discussion by the cartel is whether to extend the current six-month production-cut deal beyond the mid-2017 expiration, and if so, for how long and whether the reductions should be increased.

It is widely expected an extension will occur, and energy officials from Saudi Arabia and Russia this week signaled they back a nine-month extension. That helped give oil a start-of-week gain that’s been built on since, putting crude on pace to modestly top the 3.5% jump logged last week.

After settling Thursday at three-week highs, light, sweet crude futures for delivery in June CLM7, +1.64%  jumped 59 cents, or 1.2%, to $49.93 a barrel. The contract briefly topped $50 a barrel for the first time since April, according to FactSet data.

July Brent crude LCON7, +1.77%  on London’s ICE Futures exchange also gained 59 cents, or 1.2%, to $53.10 a barrel.

Li Li, energy research director at ICIS China, attributed Friday’s advance to pre-meeting optimism, but said she doesn’t “expect prices to jump hugely from the current trading range.”

 

The presidential election in Iran was also grabbing oil trader’s attention on Friday. Commerzbank analysts said the result could have “major consequences for the oil market” if conservative cleric Ebrahim Raisi wins the vote. Raisi and reform-oriented incumbent Hassan Rouhani are leading the polls.

Read: Iranians head to the polls in high-stakes presidential election

Raisi has expressed criticism of the nuclear agreed in 2015 that paved the way for the U.S.-led sanctions to be lifted and allow Iran to sell oil on the international energy markets.

If Raisi wins “the agreement in its current form would risk being overturned. New sanctions would then very likely be imposed by the US and the West, which could reduce the oil supply from Iran even in the short term,” the Commerzbank analysts said.

“An election victory for Raisi would therefore drive oil prices up noticeably,” they added.

Read: The overlooked upside for oil in Iran’s election

Later on Friday, oil prices would also be steered by the latest weekly U.S. rig-count data from Baker Hughes. That report has shown 17-straight weeks of growth in active oil-drilling rigs.

But government figures on Wednesday showed the first week-to-week drop in domestic oil production since February, a development which also helped lift crude prices this week and get light, sweet crude back toward $50.

To some, the past two weeks’ price rebound was to be expected after April’s slide. That drop “was a case of sentiment over substance,” said BMI Research. It sees more price gains to come the next several months, but they “are more likely to be incremental rather than exponential.”

As for oil products, Nymex June gasoline futures RBM7, +1.72%  rose 1% to $1.62 a gallon, while ICE gasoil gained 1% to $469.75 per metric ton.

Natural gas futures NGM17, +2.36%  advanced 0.8% to $3.21 per million British thermal units.

 

[Wiljor]

Good morning Adam, we are watching this very closely. 

[Adam Montana]

Just now, Wiljor said:

Good morning Adam, we are watching this very closely. 

 

Yes we are!  

[Synopsis]

Thank You, Adam! 

 

Go Moola Nova!

[Officiallytook]

Good days Adam 

Can not wait!!!

 

 

[jcfrag]

I am drinking from the "hopium" cup this morning. No coffee for me thank you!!!      

[Yabadabado]

Without a doubt Gas prices here in Texas have gone up. Regular this AM was $2.25 Regular.

[King Bean]

5 minutes ago, Yabadabado said:

Without a doubt Gas prices here in Texas have gone up. Regular this AM was $2.25 Regular.

Just made a quick trip in Washington State yesterday. Standing at $2.85 regular. $2.39 in Idaho. Go figure ??

[jeepguy]

National average is at 2 30  a gallon ,. Might find it lower in places, like out skirts of Kentucky , might be 2 15 area ..  ( , will the increase of oil prices , give Iraq incentive to raise the dinar values? Or give them an excuse to postpone it,by saying" we can increase the reserves now ". And keep our people poor ? 

[jeepguy]

Would be very nice to see value, right before they go to Ramadan 

[WheresmyRV?]

What would happen if gas skyrocketed to 3 to 4 bucks a gallon and they still don't raise their value of their currency?  A lot of people are gonna be peed off I'm thinking.

[ScaryMary]

Here in Bay Area it's $2.88.  At the arco ampm stations and that's cheap.  $3.39 otherwise.

[wealthhound]

2 hours ago, Synopsis said:

Thank You, Adam! 

 

Go Moola Nova!

 

[Mammaw]

Working in Atlanta Ga. 219 to 229.  Depending on where you are.  Great need Adam, made my day.

[foxtrot scout II]

"Without a doubt Gas prices here in Texas have gone up. Regular this AM was $2.25 Regular"-Yabadabado

 

ETX area $1.96-$2.09......

[tigergorzow]

OPEC oil price rises as producers pledge to output cuts

May 19 2017 11:46 AM

OPEC oil price rises as producers pledge output cuts

 

The price of OPEC basket of thirteen crudes stood at 49.87 US dollars a barrel on Thursday, compared with 49.43 US dollars a barrel on Wednesday, according to OPEC Secretariat calculations.

Oil prices rose on Thursday in a volatile session on growing signs that key oil producers will adhere to production cuts at next week's OPEC meeting amidst a persistent global glut, as reported by CNBC.

The Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia pledged to cut output by almost 1.8 million barrels per day (bpd) in the first half of 2016, a deal likely to be extended until the end of March 2018.

Leaders from OPEC and other producers are to meet in Vienna on May 25 to decide on output policy. The group is expected to prolong its agreement to limit production for up to nine months.

Russia's largest oil producer Rosneft will meet its agreements with OPEC on oil output reductions, Igor Sechin, Rosneft chief executive, told reporters in Berlin on Thursday.

The price also rose on Wednesday after news of a drawdown in US crude inventories and a dip in US output.

The U.S. Energy Information Administration said inventories fell 1.8 million barrels in the week to May 12 to 520.8 million barrels.

The OPEC Reference Basket of Crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Rabi Light (Gabon), Iran Heavy (Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).

 

http://www.thebaghdadpost.com/en/story/10772/OPEC-oil-price-rises-as-producers-pledge-to-output-cuts

[ChuckFinley]

Thanks Adam, marked my calander.   

[jmartin1145]

1.99 a gallon today in Corbin Kentucky.

[currenzcraze]

$2.25 in the panhandle of Florida 

[NoviceInvestor]

But fuel in Oz at the

moment and your gallon would cost you $3.68us a gallon....

 

[yota691]

of OPEC 's decision reflected positively on the Iraqi investments

 

 

 44 minutes ago

 

Twilight News / said Sami al-Araji, chairman of the National Investment Commission in Iraq, said that the pace of his country's domestic investment, rose, since the entry of his country cut crude oil production agreement.

Despite his attempts to exclude from the decision to cut production, Iraq has entered the agreement with members of the "OPEC" countries, and 11 independent state earlier this year, and announced a reduction of production volume of 210 thousand barrels per day.

He said al-Araji, the Anadolu on the sidelines of his participation in the World Economic Forum at the Dead Sea in Jordan, said that the decision to cut crude oil production, increased the price of a barrel and the good of the country's revenues, and therefore investment.

The Iraqi official did not say, attributed the improvement in the incomes of the country after the implementation of the reduction of the production agreement, or the increase in the local Iraqi investment values.

It announced that "OPEC" Organization for the end of November / November, the past, that its members had reached agreement on the overall production of the Organization reduced by 1.2 million barrels starting from the first of January / January 2017 for a period of six months, has already entered the agreement into force.

The decision aims to re-stabilize the global oil markets, after a wave of decline in prices during the past two and a half years, as a result of higher supply in the market.

Since the agreement, crude oil prices surged 15 percent, to around $ 52 at the present time, up from $ 45 before the agreement.

Iraq has suffered from a sharp fall in crude oil prices since mid-2014, down from $ 120 a barrel to around $ 27 early last year, before the re-rise to the limits of $ 52 at the present time.

In the context, connected, al-Araji said that his country and Jordan have begun the final stage of planning to extend the pipeline to transport oil, "There are two parts of the project, the first of Basra and Najaf, and the second of Najaf and Aqaba, Jordan (South)."

He added: "We discussed yesterday, on how to work on the ground between all parties to distribute."

He stressed that his country reached the stages of the legal and technical recent reopening of the Iraqi Trebil crossing (west) with Jordan, the main road link between the two countries. "

It will be a US security company functions on the organization of work Trebil crossing, the main street and protect the security of any possible attacks.

The first on Thursday, discuss Jordan's King Abdullah II and Iraqi President Fuad Masum, securing the international road between their two countries, and a project to extend the oil pipeline from southern Iraq to Aqaba.

Jordan and Iraq signed on 9 April / May 2013, to extend the framework of a tube with a length of 1700 km to transport Iraqi crude oil from Basra to export terminals in Aqaba, and at a cost of close to about $ 18 billion and with a capacity of one million barrels per day agreement.

The international highway between Baghdad and Amman, passing in Anbar province, suffered significant damage, as a result of military and terrorist organization by "Daesh" operations. 

[Miamiheatnic]

$2.02 here in Hot Springs, AR.  

[jeepguy]

19 hours ago, jmartin1145 said:

1.99 a gallon today in Corbin Kentucky.

going too fill up so I can run out , and fill -up in corbin  .....    gas gets a little easier the more south we go towards tennessee

[ChuckFinley]

$2.03 in Newport News VA.

[wealthhound]

2.25 $ in Colorado today.