New York — The oil complex settled higher Monday as the market digested supply concerns in the wake of a meeting between key OPEC leaders and their allies Sunday.
NYMEX November WTI settled up $1.30/b at $72.08/b and ICE November Brent closed $2.40/b higher at $81.20.
OPEC and its non-OPEC partners gathered in Algiers over the weekend for a meeting of their Joint Ministerial Monitoring Committee, although talk of keeping the market well supplied remained thin on detail.
"OPEC pretty much rebuffed the [Trump] administration, and said they weren't going to increase production significantly, so now we will be watching to see the response," Confluence Investment Management chief market analyst Bill O'Grady said in an interview.
US President Donald Trump called on OPEC to help curtail the rise in oil prices in a tweet last week.
An increase in tensions in the Middle East following an attack on a military parade in Iran Sunday also supported higher market levels on Monday. Iranian officials blamed the attack on the US and its allies in the Persian Gulf.
Although the entire oil complex moved higher on Monday, gains in prompt Brent futures were nearly double those seen in WTI on a dollar basis. The lopsided gains is due in part to the fact that Brent is typically considered to be more exposed to price risk stemming from the resumption of US sanctions on Iran.
But US crude production saw its own bullish indicators on Monday. US commercial crude inventories were expected to have fallen by 2.2 million barrels during the week ended 21 September, according to a number of analysts surveyed by S&P Global Platts. Additionally, exports to China resumed for the first time in at least five weeks with 1.6 million barrels reported loaded last week, according to Platts cFlow estimates.
"We are heading into maintenance season and we should see an increase in US inventories, and that should be bearish" O'Grady said. "But seasonal patterns in inventories could be upset due to the advent of exporting. If we don't get an inventory build in the next few months $90-100/b oil is not out of the question."
Discussion of crude prices approaching $100/b was also heard among traders at the S&P Global Platts Asia Pacific Petroleum Conference in Singapore. "The market simply does not have an adequate supply response for 2 million b/d of oil disappearing from the market," Daniel Jaeggi, president and co-founder of Mercuria Energy Trading, said, referring to the anticipated supply shortfall once US sanctions are implemented on Iranian exports. "It is conceivable to see oil north of $100/b," he added.
Refined products futures also finished the day higher.
NYMEX October ULSD was up 5.99 cents at $2.2859/gal at market close, and NYMEX October RBOB settled 3.76 cents higher at $2.0547/gal.
Products futures pricing received support from an increase in refinery turnaround activity. This week approximately 3.32 million b/d of total US refining capacity will be offline for maintenance, according to S&P Global Platts Analytics estimates. This marks a 456,000 b/d uptick from the week ended September 21.
Flaring at Chevron's 269,000 b/d El Segundo refinery due to an unspecified unit upset added further upward pressure on pricing Monday.
