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(Bloomberg) — Crude rose the most in more than a week as OPEC ministers worked behind closed doors to heal a rift over unprecedented production limits.
Futures closed 1.8 percent higher in New York, the biggest one-day gain since June 7. Saudi Arabian Energy Minister Khalid Al-Falih and his Iranian counterpart, Bijan Namdar Zanganeh, indicated the petroleum powerhouses are moving closer to agreement on the fate of supply caps that tamed a worldwide glut and lifted oil prices.
“The market continues to see-saw over uncertainty surrounding what the producers are really going to do at the meeting this week,” said Gene McGillian, a market research manager at Tradition Energy in Stamford, Connecticut.
Prices also rose on the strength of a U.S. government report that showed a plunge in American crude inventories last week that was more than double the average estimate from 12 analysts in a Bloomberg survey.
In Vienna, Al-Falih told reporters that “of course” there will be an agreement after the cartel meets on June 22. Zanganeh said he was “optimistic” about reaching an accord, a remark that appeared to fly in the face of comments Tuesday that suggested a deal was unlikely.
West Texas Intermediate crude for July delivery, which expired Wednesday, rose $1.15 to settle at $66.22 a barrel on the New York Mercantile Exchange. The more-active August contract added 81 cents to end the session at $65.71.
Brent futures for August settlement fell 34 cents to settle at $74.74 on the ICE Futures Europe exchange. The global benchmark traded at a $9.03 premium to WTI for the same month.
In the U.S., crude stockpiles plunged by 5.91 million barrels last week while gasoline inventories rose by 3.28 million barrels, according to Energy Information Administration data released on Wednesday.
Nationwide refinery utilization rates are at historically high levels, above the average of 2013-2017. Refiners are producing plenty of gasoline and the question remains whether summer demand will be strong enough to whittle down supply levels.
“The report was a bit mixed — a stronger decline in oil inventories, but that was partially offset by a bit of a surprise increase in gasoline inventories,” said Rob Thummel, managing director at Tortoise, which handles $16 billion in energy-related assets. “A lot of this data is playing second fiddle to anything that comes out of OPEC at this point and the meeting that’s coming up.”
Other oil-market news:
Gasoline futures fell 0.7 percent to settle at $2.0235 a gallon. As many of its rivals struggle to move oil from the Permian Basin to the Gulf Coast in search of higher prices, Occidental Petroleum Corp. is sitting pretty at a time when pipeline space is at a premium. OPEC was said to plan a meeting in September at which the cartel will review the state of the market, according to a delegate.
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