Futures Market Momentum Slows in Expectation of More Opec Crude
The futures market for oil showed a tempered increase in prices, despite analyst expectations of a significant boost in Opec crude production. Analysts point to "rumors" and "press leaks" that Opec will soon increase output, but these claims have been denied by official Opec spokespersons. The market's upward momentum has slowed, with prices rising modestly, and analysts expect prices to relax in the coming week.
Key Takeaways:
- September light, sweet crude finished at $31.99/barrel, up a mere 5 cents from the previous day.
- October crude rose by 23 cents, closing at $31.56/barrel, with a weekly activity showing a strong 97-cent rise for the front-month contract.
- Analysts expect a tangible increase of 500,000 barrels per day in Opec output, with some estimating an additional 300,000 b/d already in the market.
- Phil Flynn of Alaron Trading believes a power struggle between Venezuela and Saudi Arabia may be behind Opec's potential increase in production.
- Venezuela's Energy and Mines Minister, Ali Rodriguez, stated that Opec will react to fundamental market conditions, not "speculative pricing."
- Prices for gasoline and distillates have relaxed, with gasoline increasing by 3.11 cents and distillates mimicking the behavior of crude.
Statistics:
- September light, sweet crude: +5 cents (previous day), $31.99/barrel
- October crude: +23 cents, $31.56/barrel (closed)
- Weekly activity (front-month contract): +97 cents
- Opec output increase: 500,000 barrels per day (estimated)
- Gasoline price increase: +3.11 cents
- Heating oil price increase: +1.18 cents
Sources:
- Bloomberg (Hazeltine, 1979)
- Finanical Times ( *"rumors" and "press leaks"*)
- Interview with Phil Flynn, Alaron Trading
- Energy and Mines Minister, Ali Rodriguez's statement