Analysis by Dr. Nancy Yamaguchi
Oil prices are clinging to the $46.25 – $46.50 per barrel (/b) price neighborhood this morning in early trading. Last week brought a recovery of slightly over $2/b, which erased the prior week’s losses.
On Friday, Baker Hughes published its rotary rig count data for the week ended July 14. The total rig count remained unchanged at 952 total, with a small shift of two natural gas rigs down and two oil rigs up. This brought the active oil rig count up to 765—the highest number since the week ended April 2, 2016. The gas rig count declined by two to 187. The total active rig count has increased in 25 out of 28 weeks so far this year. Therefore, this result should be viewed as positive for the supply situation.
Royal Dutch Shell has announced a force majeure on Bonny Light crude exports in Nigeria, just two weeks after it had lifted a prior force majeure. Nigerian crude production has been recovering steadily in recent months, growing from 1,457 thousand barrels per day (kbpd) in March to 1,733 kbpd in June, a recovery of 276 kbpd.
Nigeria is not a participant in the OPEC-non-OPEC production cut agreement, chiefly because of such disruptions. Its recent success in restoring output prompted its fellow OPEC members to consider whether Nigeria (and Libya also) should cap its output. Now, the length of the disruption will need to be considered.
West Texas Intermediate (WTI) crude prices closed in the back last Friday, gaining $2.19/b for the week. WTI opened at $46.68/b today, up by 60 cents from Friday’s opening price. WTI futures prices are $46.49/b currently, down by 19 cents from today’s opening price.
Diesel prices closed in the black last week also, rising by 6.38 cents/gallon. Diesel opened at $1.5186/gallon this morning. This was an increase of 2.46 cents (1.65%) above Friday’s opening price. Diesel prices are $1.5139/gallon currently, down by 0.47 cents from today’s opening price.
Gasoline prices gained a significant 5.41 cents/gallon last week, after decreasing by 1.51 cents/gallon the previous week. Gasoline opened at $1.5625/gallon today, up by 3.65 cents, or 2.39%, from Friday’s opening. Gasoline prices are $1.5624/gallon currently, down slightly by 0.01 cents from today’s opening.