Oil futures held on to small gains Wednesday after the Organization of the Petroleum Exporting Countries its allies approved a small output increase that’s seen as largely symbolic.
Price action
- West Texas Intermediate crude for September delivery CL.1, -2.13% CL00, -2.13% CLU22, -2.13% rose 33 cents, or 0.3%, at $94.75 a barrel on the New York Mercantile Exchange.
- October Brent crude BRN00, -1.93% BRNV22, -1.93%, the global benchmark, was up 41 cents, or 0.4%, at $100.95 a barrel on ICE Futures Europe.
- Back on Nymex, September gasoline RBU22, -2.57% rose 0.9% to $3.084 a gallon, while September heating oil HOU22, +0.88% gained 3% to $3.482 a gallon.
- September natural gas NGU22, -0.83% edged up 0.3% to $7.726 per million British thermal units.
Market drivers
OPEC and its allies, known as OPEC+, agreed to raise production by 100,000 barrels a day in September, a move that analysts didn’t expect to significantly affect prices. The move comes after U.S. President Joe Biden last month visited Saudi Arabia, OPEC’s de facto leader and swing producer.
Concerns over tight spare capacity and uncertainty over the longer-term supply outlook were cited by OPEC as a factor in the decision.
Meeting participants “noted that the severely limited availability of excess capacity necessitates utilizing it with great caution in response to severe supply disruptions,“ OPEC said in a statement following the meeting.
“In my opinion, market fundamentals are slipping, and the end of summer driving season will necessitate less crude oil through the refinery. However, the 100,000 is a slap to the face for President Biden,“ said Robert Yawger, executive director of energy futures at Mizuho Securities, in a note.
“Also, some analysts will question whether Saudi Arabia and the other Gulf states actually have spare capacity available, as French President Macron famously implied on an open mic during the G-7 meeting“ in June, Yawger wrote.
U.S. supply data will also be in focus Wednesday. The American Petroleum Institute late Tuesday said U.S. crude inventories rose 2.2 million barrels last week, Dow Jones Newswires reported, while gasoline inventories fell 204,000 barrels.
The Energy Information Administration’s official figures are due Wednesday morning. Analysts surveyed by S&P Global Commodity Insights, on average, look for crude stocks to fall 1.7 million barrels, while gasoline inventories are seen down 1.5 million barrels and distillate supplies are expected to show a decline of 500,000 barrels.
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