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Oil prices up but off highs on output freeze talk, gasoline tumbles

oil prices

Venezuelan President Nicolas Maduro announced a deal which would stabilse oil prices could be announced this month. PDC Energy photo.

Oil prices up one per cent on deal speculation

By Barani Krishnan

NEW YORK, Sept 19 (Reuters) – Oil rallied on Monday before settling off its highs on skepticism over Venezuela’s bid to talk up a potential OPEC output freeze and on indications U.S. crude stockpiles had risen last week.

Clashes in Libya that foiled a restart of crude exports from key ports, along with higher equity prices on Wall Street and a weaker dollar, helped oil end higher.

U.S. gasoline futures tumbled nearly 3 percent as players booked profit on a 9 percent rally sparked by a leak on a key gasoline pipeline on Sept. 9. Pump prices in the southeast have jumped as well as Colonial Pipeline Co tried to fix a more-than-week long disruption.

Brent crude futures settled up 18 cents, or 0.4 percent, at $45.95 a barrel. It rallied more than 2 percent earlier, reaching $46.93.

U.S. West Texas Intermediate (WTI) crude futures closed up 27 cents, or 0.6 percent, at $43.30. The session high was $44.15.

Last week, Brent hit a two-week low of $45.48 and WTI fell to a five-week low of $42.74 on concerns about oversupply with more deliveries from Libya and Nigeria.

In Monday’s trade, oil initially rallied on reports that clashes in Libya halted the loading of the first oil cargo from the port of Ras Lanuf at the weekend. A port official, however, said loading was due to start late afternoon.

Also boosting the markets early was Venezuelan President Nicolas Maduro’s remarks on Sunday that the Organization of the Petroleum Exporting Countries and other major oil producers were close to reaching a deal on price stability.

Oil producers are to meet Sept 26-28 on the sidelines of an industry conference in Algeria for talks on potentially freezing oil production, ahead of OPEC’s all-important policy meeting in November.

But by the close, oil pared much of its advance as the market turned skeptical of OPEC’s commitment to an output freeze, especially with key members of the group boosting exports while talking of a production deal.

Saudi crude exports rose in July to 7.62 million barrels per day from 7.46 million b/d in June, data on Monday showed.

A Reuters poll, meanwhile, showed U.S. crude stockpiles likely rose 2.3 million barrels last week, after back-to-back declines in two previous weeks.

OPEC Secretary-General Mohammed Barkindo hinted at the weekend that if a freeze deal was not achieved next week, the group may shoot for one at its November summit.

“The agency’s Sec Gen appears to be sending off signals that the talks will be informal and unlikely to result in a decision to restrain output,” said Jim Ritterbusch of Chicago-based oilmarkets consultancy Ritterbusch & Associates.

“Bottom line: We see lower values ahead with WTI and Brent poised for additional decline to about $39 and $40.50 respectively, potentially by the end of next week.”

(Additional reporting by Dmitry Zhdannikov in LONDON and Mark Tay in SINGAPORE; Editing by Marguerita Choy and Diane Craft)

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