Oil futures ended sharply higher on Thursday, with U.S. prices at their highest in a month, supported by recent data that showing a sharp drop in U.S. crude inventories.
Prices moved up despite a decision by a group of global oil producers to make no changes to their plan to gradually increase crude production.
It’s a case of “sell the rumor,...
Oil futures ended sharply higher on Thursday, with U.S. prices at their highest in a month, supported by recent data that showing a sharp drop in U.S. crude inventories.
Prices moved up despite a decision by a group of global oil producers to make no changes to their plan to gradually increase crude production.
It’s a case of “sell the rumor, buy the news,” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch.
The Organization of the Petroleum Exporting Countries and its allies, a group collectively known as OPEC+, decided Wednesday to stick to a plan reached in July to increase oil production by 400,000 barrels a day each month from August.
The decision came despite pressure from the Biden administration for the group to pump even more oil to help lower prices, said Richey. That, “paired with the fact that the group’s leadership reiterated commitment to stable market conditions and flexibility in future policy decisions to make sure that goal is achieved,” helped oil rally in the wake of the meeting, he said.
A big draw in commercial crude-oil stockpiles reported by the Energy Information Administration, and a new pandemic-era low in weekly jobless claims reported Thursday, may have also added “tailwinds to energy markets,” said Richey.
West Texas Intermediate crude for October delivery CLV21 CL00 rose $1.40, or 2%, to settle at $69.99 a barrel on the New York Mercantile Exchange. That was the highest front-month contract settlement for the U.S. benchmark since Aug. 3, according to Dow Jones Market Data.
Global benchmark November Brent crude BRNX21 BRN00 added $1.44 or 2%, to $73.03 a barrel on ICE Futures Europe, for its first gain in three sessions.
Some analysts had anticipated that OPEC+ would consider a delay in proceeding with lifting output curbs due the spread of the delta variant of the coronavirus which has threatened to weaken energy demand.
After the decision, Caroline Bain, chief economist at Capital Economics, said the move may lead to a surplus in global supplies early next year and pressure prices for Brent crude.
Read:OPEC+ decision to keep increasing oil output feeds expectations for a 2022 surplus
However, market participants said U.S. petroleum supply data reported Wednesday was supportive.
The Energy Information Administration reported that U.S. crude inventories fell by 7.2 million barrels for the week ended Aug. 27 following three weeks of declines in a row, more than 60% greater than the average decline of 4.4 million barrels expected by analysts polled by S&P Global Platts.
Gasoline supplies, however, edged up by 1.3 million barrels last week, EIA data showed.
Gasoline supplies “may not maintain that trend” with the U.S. Labor Day holiday approaching and the temporary shutdown of the Colonial Pipeline likely to impact this week’s data, said Marshall Steeves, energy markets analyst at IHS Markit. The EIA will issue its next inventory report, covering the week ended Sept. 3, next Thursday — a day later than usual because of Monday’s Labor Day holiday.
On Nymex Thursday, October gasoline RBV21 added 2.5% to $2.16 a gallon and October heating oil HOV21 rose 1.8% to $2.17 a gallon.
Read: As Ida drenched New York and beyond, the hurricane is on track to be the most expensive ever
Natural-gas futures, meanwhile, scored their sixth gain in seven sessions, with the October contract NGV21 up 0.6% at $4.64 per million British thermal units, marking another settlement at the highest since November 2018.
The EIA on Thursday reported that domestic supplies of natural gas rose by 20 billion cubic feet for the week ended Aug. 27. That matched the average increase forecast by analysts polled by S&P Global Platts.
Supplies in storage stand below the year-ago and five-year average levels, according to EIA data. The Bureau of Safety and Environmental Enforcement reported Wednesday 83.21% of natural-gas production in the Gulf of Mexico remains shut in in the wake of Hurricane Ida.
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U.S. oil prices at 1-month high, buoyed by a drop in U.S. supplies, after OPEC+ output decision - MarketWatch
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