Commodities - Crude Oil Prices Turn Lower, Eyes on OPEC Meeting

Oil prices remained at $55.50 per barrel despite reduced output from OPEC that aims to constrict the market and shore up the prices.

Oil prices rose by 1 percent on Wednesday morning and were set for the biggest third-quarter gain since 2004, as investors weighed the renewed talk of possible deeper OPEC cuts, along with the results of this week's EIA inventory report.

The gains came despite Energy Information Administration data released Wednesday showing that USA crude supplies climbed by 4.6 million barrels for the week ended September 15, far above a recent S&P Global Platts forecast for a 2.4 million barrel rise.

OPEC, led by Saudi Arabia, and other non-OPEC members such as Russian Federation pledged they will decrease their output to by 1.8 million barrels per day in 2017 up to next year. USA oil production also rose a second week. Crude production increased for a second straight week, yet distillate supplies slid by 5.69 million barrels and gasoline stockpiles fell to 216.2 million barrels. Still another group-including Ecuador and Iraq-think that it's more cuts that should be discussed, Iraqi Oil Minister Jabbar al-Luiebi said on Tuesday.

Oil prices have mostly been in an uptrend over the past three weeks since Hurricane Harvey struck Texas and the oil-and-gas rich U.S. Gulf of Mexico on August 26, shutting down a quarter of the U.S. refining capacity of almost 18 million bpd.

Trump Wants to Hold a Military Parade for the Fourth of July
Washington already holds quite a few parades, including some with military participation that are held on Memorial Day and July 4. The US does not have a history of major military parades marching through its cities, except to celebrate wartime victories.

Crude inventories rose by 1.4 million barrels in the week to September 15 to 470.3 million, compared with expectations of a 3.5 million barrel increase. Analysts forecast that stockpiles of gasoline likely fell 2.1 million barrels last week. The EIA's next weekly dataset is on Wednesday.

Traders stated that the US Dollar also strengthened, further adding pressure on the oil prices. "The question now is whether the $50-per-barrel WTI price is attractive enough for shale producers to sell their production forward".

Conversely, due to demand, Nolting says prices won't fall dramatically either: "So I think it's quite stable in the oil sector".

The International Energy Agency in its latest monthly report said commercial OECD oil stocks stayed flat in July, month-on-month, at 30.016 million barrels, about a 190 million barrels above Organization of the Petroleum Exporting Countries' target of the last five year average. "Stronger exports also affirmed returning operational strength in the USA refining hub".

  • Megan Austin