Oil rose as September opened, with traders counting down the hours until an OPEC+ meeting that should result in a further rise in output.
West Texas Intermediate was up 1 percent after losing more than 7 percent in August, the biggest monthly decline this year. The Organisation of Petroleum Exporting Countries (OPEC) and its allies, including Russia, are expected to ratify a plan to add 400,000 barrels-a-day in October, wagering that the market can absorb the extra flows as demand recovers from the coronavirus pandemic.
Traders were also assessing figures that pointed to a climb in crude inventories in Cushing, Oklahoma. The industry-funded American Petroleum Institute reported holdings at the key hub rose more than 2 million barrels last week, according to people familiar with the figures. Gasoline stockpiles also gained, although there was a draw in nationwide crude inventories, the data showed, ahead of a government breakdown later on Wednesday.
After rallying in the first half, crude’s surge stalled over the past two months amid concern about the spread of the delta variant and a rebound in the US dollar. OPEC+ has been gradually restoring the supply it took offline last year as the pandemic broke out, crushing consumption. The alliance projects that global inventories will continue to drop this year even as it loosens the taps.
“The market is likely to remain volatile – we not only have the OPEC meeting, hurricane season is also upon us,” said Howie Lee, Singapore-based economist at Oversea-Chinese Banking Corp.
“Brent is still expected to trend within $70 to $75 for now, but the near-term volatility means it may overshoot on both ends momentarily in the coming week or two.”
Prices:
- WTI for October delivery rose 1 percent to $69.16 a barrel on the New York Mercantile Exchange at 11:26am in Singapore. Prices dropped 1 percent on Tuesday.
- Brent for November settlement added 1 percent to $72.31 a barrel on the ICE Futures Europe exchange.
In the US, the restoration of supplies and refining continues in the Gulf of Mexico and Louisiana after the severe buffeting delivered by Hurricane Ida at the weekend. Port Fourchon, America’s biggest base supporting the region’s offshore industry, appears to have largely withstood the storm.
Brent’s prompt timespread was 63 cents a barrel in backwardation. While that’s a bullish pattern – with near-dated prices trading above those further out – it is down from 97 cents a week ago.
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