Oil Mar­ket Out­look

Bangkok Post - - BUSINESS -

Oil prices last week posted their big­gest weekly gain since late July as Texas re­finer­ies re­cov­er­ing from Hur­ri­cane Har­vey pro­cessed more crude and global de­mand fore­casts bright­ened.

Sen­ti­ment was also buoyed by the pos­si­bil­ity that Opec and non-Opec pro­duc­ers would ex­tend their pro­duc­tion cuts of 1.8 mil­lion bar­rels per day be­yond March, with Saudi Ara­bia and Rus­sia ap­pear­ing to sup­port the idea.

How­ever, gains were capped by an in­crease in US crude in­ven­to­ries — the first in 10 weeks — that was even higher than an­a­lysts had fore­cast as post-Har­vey re­fin­ery ac­tiv­ity re­mained lim­ited.

West Texas In­ter­me­di­ate (WTI) crude in­creased by $2.41 to close at $48.89 per bar­rel. Brent gained $1.84 to $55.62 and Dubai crude av­er­aged $53.50. Thaioil fore­casts that WTI this week will move within the range of $48 and $53, while Brent will trade be­tween $52 and $57. Prices are ex­pected to be steady, as US crude stocks should fall as re­finer­ies re­cover. How­ever, any gains could be lim­ited by steppedup pro­duc­tion from the Gulf of Mex­ico. Among the fac­tors ex­pected to in­flu­ence trade:

The largest US re­fin­ery, op­er­ated by Mo­tiva En­ter­prises in Port Arthur, Texas with a ca­pac­ity of 603,000 bar­rels per day, has re­sumed op­er­a­tion, which should lift de­mand for crude over the next few weeks and send stock­piles down again. Crude in­ven­to­ries in the week to Sept 8 rose by 5.9 mil­lion bar­rels to 468.2 mil­lion, re­flect­ing weak post-Har­vey de­mand, the En­ergy In­for­ma­tion Ad­min­is­tra­tion (EIA) said. Nearly a quar­ter of US refin­ing ca­pac­ity was shut­tered in the wake of Har­vey, but only three Gulf Coast re­finer­ies re­mained closed as of last Fri­day.

The global crude over­sup­ply is ex­pected to ease amid growth in de­mand and the im­pact of Opec-led pro­duc­tion cuts. Com­mer­cial stocks in OECD coun­tries have de­clined to 3,016 mil­lion bar­rels, just 190 mil­lion above the five-year av­er­age. The In­ter­na­tional En­ergy Agency (IEA) last week in­creased its fore­cast for world oil de­mand this year by 100,000 bpd to 1.6 mil­lion.

US crude oil pro­duc­tion is on the rise again as Gulf of Mex­ico rigs shut­tered by Har­vey re­sume work. Out­put in the week to Sept 8 rose by 572,000 bpd to 9.35 mil­lion, the EIA re­ported. How­ever, the US rig count fell for the fourth time in five weeks, de­clin­ing by seven to 749, with drops in the Per­mian and Ea­gle Ford shale basins in Texas.

Opec and non-Opec pro­duc­ers will meet on Thurs­day to dis­cuss a pos­si­ble ex­ten­sion of their curbs. Kuwait’s oil min­is­ter said more non-Opec pro­duc­ers are be­ing ap­proached, namely Colom­bia, Uganda and South Su­dan. Opec pro­duc­ers im­proved their com­pli­ance to 82% of agreed cuts in Au­gust from 75% in July, while non-Opec com­pli­ance was 119% of the roughly 600,000 bpd they have agreed to take off the mar­ket.

Eco­nomic in­di­ca­tors to watch in­clude US and euro zone man­u­fac­tur­ing and con­sump­tion in­dices, and euro zone con­sumer prices.

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