Oil edges up on talk of possible exporter moves to prop up market

By Henning Gloystein

SINGAPORE (Reuters) – Oil prices edged up on Friday, remaining near the previous day’s highs, on the prospect of talks by exporters about ways to prop up a market grappling with a supply overhang.

Brent crude futures were trading at $46.12 per barrel by 0645 GMT, receding from a three-week high of $46.66 earlier in the day, though still up 8 cents from their last close.

U.S. West Texas Intermediate (WTI) crude stood at $43.70 a barrel, up 21 cents after touching its highest since July 25, at $44.17 per barrel.

Both price benchmarks rose more than 4 percent on Thursday.

Markets were pushed up as Saudi Arabia’s energy minister Khalid al-Falih said late on Thursday that oil producers would discuss potential action to stabilise oil prices during a meeting next month in Algeria.

“Talk of production cuts in the oil market saw prices surge overnight,” ANZ bank said on Friday.

An outlook published by the International Energy Agency (IEA) that said it expected the supply and demand balance to tighten towards year-end also supported prices.

Traders said a drop of 8.1 percent in China’s oil output in July, to a five-year low of 16.72 million tonnes, also lifted prices because it would mean Asia’s biggest economy has to import more crude.

However, China’s implied oil demand fell 0.1 percent from a year ago to 10.11 million barrels per day, its lowest since August 2014.

And oil prices are still more than 12 percent below their last peak in June, as brimming storage tanks and production that exceeds consumption weighs on markets.

In physical oil markets, Iran set its September official selling price for light crude to Asia at a discount of $0.85 per barrel versus benchmark Oman/Dubai prices.

This made the Iranian light grade $1.30 a barrel cheaper than in the previous month, the latest sign that exporters are willing to accept discounts in return for market share.

AB Bernstein said global oil production rose almost 0.8 million barrels per day (bpd) in July from the previous month, to 97.01 million bpd, while commercial inventories increased by 5.7 million barrels to 3.09 billion barrels in June.

Despite cheap crude feedstocks prices, analysts said refinery margins, known as cracks, were poor as refiners continued to make more fuel than the market can absorb.

For July, Bernstein put Brent cracking margins at $3.02 per barrel (down $1.83 from June); U.S. Gulf Coast cracking margins at $5.06 a barrel (down $0.03); and Singapore cracking margins at $4.74 per barrel (down $1.03).

(Reporting by Henning Gloystein; Editing by Joseph Radford and Tom Hogue)

Share this article

Follow Offshore Energy Today

Events>

<< Aug 2019 >>
MTWTFSS
29 30 31 1 2 3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
26 27 28 29 30 31 1

Africa Oil Week 2020

For over 25 years Africa Oil Week has been the meeting place for Africa’s most senior E&P stakeholders.

read more >

CERAWeek 2020

 Each year, CERA clients gathered for a few days in Houston…

read more >

Offshore Technology Conference (OTC) 2020

The Offshore Technology Conference (OTC) showcases leading-edge technology for offshore drilling, exploration…

read more >

2020 EXPLORATION AND PRODUCTION STANDARDS CONFERENCE ON OILFIELD EQUIPMENT AND MATERIALS

The development of consensus standards is one of API’s oldest and most successful programs.

read more >

Jobs>

Looking to fill a job opening?

By advertising your job here, on the homepage of OffshoreEnergyToday.com, you'll reach countless professionals in the sector. For more information, click below...

apply

Looking to fill a job opening?

By advertising your job here, on the homepage of OffshoreEnergyToday.com, you'll reach countless professionals in the sector. For more information, click below...

apply