OIL PRICES: ABOUT $48
NASDAQ wrote, U.S. oil prices slid to a near three-week low in early Asian trade Wednesday on expectations that U.S. crude stocks expanded last week, exacerbating the already oversupplied market.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in October traded at $46.20 a barrel at 0122 GMT, down $0.15 in the Globex electronic session, the lowest intraday level since Aug 12. October Brent crude on London's ICE Futures exchange fell $0.02 to $48.35 a barrel.
"Overall, we don't see the API data as enough of a surprise to give prices a strong push," said Tim Evans, a Citi Futures analyst. Official data by the U.S. Energy Information Administration will be released later today.
Traders and analysts surveyed by The Wall Street Journal expect the EIA to report that crude stockpiles rose by 1.2 million barrels in the week ended Aug. 26, while supplies of gasoline also fell.
For over two years, the global oil market has been roiled by a tenacious surplus of crude. The glut was mainly a consequence of major producers, in particular members of the Organization of the Petroleum Exporting Countries, opting to ramp up their production to protect their market shares, rather than scale back output to boost prices.
While prices have risen from a 13-year low seen in February, investors are still skittish about the market's nearterm growth, given that most heavyweight OPEC producers remain stubborn about their market-share first tactic.
Iran, for example, has repeatedly snubbed a proposal for a collective production freeze, saying it would continue to pump until its output is on par with that before the sanctions. Analysts expect Iran to dole out the same stance when the 14-member OPEC bloc meets later this month in Algeria. A Bloomberg report said Iran plans to boost its output by 200,000 barrels a day by the end of the year. In July, Iran's daily output was at 3.6 million.
Without Iran's commitment, Saudi Arabia is unlikely to agree to a production freeze pact as the kingdom has said a such a pact must be agreed to by all members.
The extended drop in oil prices signals "that market-watchers are increasingly doubtful for OPEC to effectively persuade prices higher in the coming month," said Barnabas Gan, an economist at Singapore-based OCBC bank.
However, the prolonged low prices has taken a toll on many oil revenue-dependent countries whose national coffers have suffered from the sharp drop in investments in their oil patches.
On Tuesday, Iraq's Prime Minister Haider ah-Abadi said OPEC's second-largest petroleum producing country is supportive of an output cap. Until now, Iraq was seen as a potential impediment to a deal because its production has soared and it desperately needs oil revenue to fight a war against the Islamic State.
"This is a noted shift in tone to what the prime minister said last week where he had indicated Iraq hadn't increased production sufficiently," said Stuart Ive, a client manager at OM Financial in Wellington.
Nymex reformulated gasoline blendstock for September--the benchmark gasoline contract--fell 14 points to $1.4469 a gallon, while September diesel traded at $1.4607, 104 points lower.
ICE gasoil for September changed hands at $426.50 a metric ton, down $1.50 from Tuesday's settlement.
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