Analysis by Dr. Nancy Yamaguchi

 

West Texas Intermediate (WTI) crude oil prices continued to retreat on Friday, falling from their mid-week highs. The week ended with WTI crude prices down by 91 cents for the week. Midweek prices had climbed above $47 per barrel (/b) based on bullish supply data from the Energy Information Administration (EIA). Pre-weekend profit taking caused Friday’s prices to close $1.14/b lower than opening prices.

 

WTI crude prices declined by $0.91/b over the course of last week. Diesel prices declined slightly, by 0.34 cents/gallon. Gasoline price finished marginally up, by 0.08 cents/gallon.

 

Crude prices levelled off at around $45.65/b over the weekend, and they have shown an uptick to slightly above $46/b in early morning trading. Similarly, diesel and gasoline prices stabilized over the weekend, and they have trended up slightly this morning.

 

Last week’s oversupply concerns were ameliorated somewhat by the Baker Hughes active rig count. The rig count fell from 952 to 950, with one oil rig and one natural gas rig leaving the active ranks.

 

OPEC and non-OPEC countries participating in the production cut agreement currently are meeting in Russia. Early indications, however, are that the group does not plan to make any changes to the agreement. This includes pressuring Libya and Nigeria to join in the cuts. Recent growth in Libyan and Nigerian output has weakened the effectiveness of the cuts by other members, prompting discussion of whether the two should accept production caps.

 

Nigeria has stated that it would cap its output once it reached 1.8 million barrels per day (MMbpd), but it does not appear that the OPEC-non-OPEC grouping will make any formal demands. OPEC reports that Nigerian crude production has risen from 1,457 thousand barrels per day (kbpd) in March to 1,733 kbpd in June, an increase of 276 kbpd.

 

WTI crude opened at $45.62/b this morning, down $1.29, or 2.75%, from Friday’s opening value. Prices are $46.00/b currently, up by 38 cents so far this session.

 

Diesel opened this morning at $1.5147/gallon, down by 2.89 cents, or 1.87%, from Friday’s opening. Diesel prices are $1.5228/gallon currently, up by 0.81 cents from today’s opening price.

 

Gasoline opened today at $1.5575/gallon, a decrease of 4.9 cents, or 3.05%, from Friday’s opening. Gasoline prices are $1.5602/gallon currently, a recovery of 0.27 cents from today’s opening.