Oil prices climb, ahead of oil-producer gathering
Oil prices climb, set for weekly gain ahead of oil-producer gathering
Published: Sept 21, 2018 8:51 a.m. ET
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Oil prices rose early Friday, hovering near multiyear highs, ahead of a meeting in Algeria between major producers at which production levels are expected to be discussed in anticipation supply disruptions.
November West Texas crude CLX8, +1.88% which became the front-month contract, added 58 cents, or 0.8%, to $70.90 a barrel on the New York Mercantile Exchange. The October contract for the U.S. oil benchmark expired at Thursday’s close. Global benchmark November LCOX8, +1.61% gained 87 cents, or 1.1%, to reach $79.57 a barrel on ICE Futures Europe.
For the week, on a most-active basis, WTI is set for a 2.7% weekly advance, while Brent oil was on track to climb by 1.9% rise.
Market participants are awaiting a closely watched meeting in Algiers of a committee made up of representatives of the Organization of the Petroleum Exporting Countries and its outside allies on Sept. 23. The producers had agreed in June to boost production in an effort to get output nearer a previously agreed ceiling. The June agreement was seen, in part, as a response to U.S. pressure.
Oil prices have been on the rise, boosted in part by President Donald Trump’s decision to pull out of the Iran nuclear accord and renew sanctions on Tehran aimed at sharply curtailing the major producer’s exports.
Iranian exports fell by around 500,000 barrels a day between April and August, according to the International Energy Agency.
On Thursday, futures ran into an early spate of volatility after Trump in a tweet called for OPEC to maintain lower crude-oil prices.
Saudi Arabia, the de facto leader of OPEC, and Russia, a major producer in its own right, ramped up production this summer to compensate for some of the lost Iranian barrels, however, additional production capacity may be limited analysts warned.
“This was supposed to be a simple monitoring committee, in charge of making sure member states were sticking to the 2016 agreement that cut production. Instead, it is likely to turn into a meeting that, in effect, parcels out Iran’s sliding production,” wrote Robert Yawger, director of energy at Mizuho USA, in a Friday research note, referring to the Algiers gathering.
Looking ahead, investors will watch out for a weekly report on rigs due at 1 p.m. from Baker Hughes BHGE, +0.40% a key metric of activity in the sector. Last week data revealed that the number of rigs drilling for oil in the U.S. climbed by 7 to 867 over the period.