Oil Closes Below $44 as OPEC May Hold Formal Meeting in Algiersby
Algeria urges 1 million barrel-a-day cut in world crude supply
Gasoline declines as Colonial Pipeline sees Line 1 restart
Oil closed little changed after Algeria said OPEC may turn its informal talks next week into a formal session. Gasoline fell after the projected restart of Colonial Pipeline’s Line 1 was moved forward to Wednesday.
Futures fluctuated in both New York and London. The 14-member group may hold a formal meeting as it seeks ways with other producers to cut crude supplies by 1 million barrels a day to re-balance markets and stabilize prices, Algerian Energy Minister Noureddine Bouterfa said. Gasoline surged last week after the unexpected shutdown of the Colonial Pipeline link that can carry more than 1 million barrels a day of gasoline from the Gulf Coast to the eastern U.S.
Oil has swung between gains and losses since August’s rally on speculation the Organization of Petroleum Exporting Countries and Russia will agree next week in Algiers on ways to stabilize the market. The group’s members are close to a deal, according to Venezuelan President Nicolas Maduro, while OPEC’s Secretary-General Mohammed Barkindo said an extraordinary meeting is possible if ministers reach a consensus.
"The comments that OPEC may hold an extraordinary meeting next week give the confab a heightened validity," said John Kilduff, partner at Again Capital LLC, a New York hedge fund focused on energy.
West Texas Intermediate for October delivery, which expired Tuesday, rose 14 cents to settle at $43.44 a barrel on the New York Mercantile Exchange. The more-active November contract advanced 19 cents to $44.05. Total volume traded was 20 percent above the 100-day average.
Futures rose from the settlement after the industry-funded American Petroleum Institute was said to report U.S. crude supplies declined by 7.5 million barrels last week. November WTI traded at $44.47 at 4:37 p.m in New York.
Brent for November settlement fell 7 cents to end the session at $45.88 on the London-based ICE Futures Europe exchange. the global benchmark closed at a $1.83 premium to WTI for the same month.
Russia is in favor of a pact that would help oil-price stabilization, and a potential one-year agreement “meets this criteria,” Interfax reported, citing Vladimir Voronkov, Russia’s envoy for international organizations based in Vienna. OPEC’s Barkindo plans to discuss issues of joint interest with Russian Energy Minister Alexander Novak in Algiers next week.
The global oil-market surplus will last for longer than previously thought, persisting into late 2017 as demand growth slows and output proves resilient, the International Energy Agency said on Sept. 13 in its monthly report. Just last month, the agency predicted the market would start returning to equilibrium this year.
"Oil producers are trying to talk the price higher," said Sarah Emerson, managing director of ESAI Energy Inc., a consulting company in Wakefield, Massachusetts. "The fundamentals are weak. The market is trading in the $40s and a move of a dollar in either direction while in this area is just noise."
Colonial Pipeline has finished construction, fabrication and positioning of a bypass connector pipeline segment around a leak site west of Pelham, Alabama, the company said in an e-mailed statement. It will take “several days” for the fuel delivery supply chain to return to normal when Line 1 restarts, Colonial said.
"The move in gasoline is all about Colonial," said Mike Wittner, head of oil-market research at Societe Generale SA in New York. "It was going to come back sooner or later, but the timing is important."
Gasoline futures for October delivery dropped 5.62 cents, or 4 percent, to settle at $1.3646 a gallon. The motor fuel climbed 7.4 percent last week.
- Saudi Arabia’s oil exports climbed in July to a record level for that month, as the kingdom curbed the amount of crude it burns to generate electricity domestically, according to the Joint Oil Data Initiative.
- Petroleo Brasileiro SA reduced investments by 25 percent and is accelerating asset disposals as it downsizes to withstand low international oil prices amid Brazil’s deepest two-year recession on record.