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Supply, Marketing, Distribution, Transportation & Logistics News & Information
August 2017 Issue

August 7, 2017: Crude Oil Prices Remain Around $49/b, Market Watching OPEC

August 7, 2017 •

Analysis by Dr. Nancy Yamaguchi

 

Crude oil prices remain in the vicinity of $49/b this morning. Over the next two days, the market will be watching for reports from the current OPEC and non-OPEC meeting. Representatives from key oil-producing countries will be meeting in Abu Dhabi today and tomorrow to discuss compliance with the production cut agreement. Kuwait and Russia are co-chairing the meeting. The main issue is falling compliance, though several members dispute the secondary source production figures used by OPEC in compliance monitoring.

 

Libya and Nigeria, who are not subject to the cut agreement, have raised their output more successfully than anticipated. The new supplies are undermining the effectiveness of the cuts made by the others. According to OPEC, Libya’s crude production averaged 390 thousand barrels per day (kbpd) in 2016, and it rose to 852 kbpd in June 2017. Nigeria’s production rose from 1,557 kbpd in 2016 to 1,733 kbpd in June 2017.

 

On Friday, the Jobs Report reported that total nonfarm payroll employment increased by 209,000 in July, outperforming market expectations of 180,000 new jobs. The unemployment rate declined to 4.3% from 4.4% the month prior. Consumer optimism remains high, giving a boost to demand forecasts.

 

Complementing this, Baker Hughes released its rig count data. The active rig count declined by one oil rig and three natural gas rigs during the week ended August 4. During the prior week ended July 28, the rig count had increased by two oil rigs and six natural gas rigs, so this essentially undid one half of last week’s gain. U.S. crude production had risen by 20 kbpd during the week ended July 28.

 

West Texas Intermediate (WTI) opened at $49.59 per barrel (/b), up by 64 cents from Friday’s opening. As of approximately 8:50 a.m. EDT, WTI prices were $49.08/b, down by 50 cents since Friday’s close.

 

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