Oil prices end with a gain after a volatile week of trading

Crude prices fell to year-to-date lows before recovering, boosted by a falling dollar.

West Texas Intermediate on the New York Mercantile Exchange rose three out of four days in a holiday-shortened trading week and nearly managed to overcome the $4.95 drop seen on Wednesday, when prices fell to 81 $.94 a barrel. Prices started the trading week with an uptick of 1 cent to $86.88 and began to recoup Wednesday’s decline adding $1.60 on Thursday. Prices added another $3.25 or 3.9% to end the week at $86.79, just below the $86.87 at last Friday’s close. The list price closed the week at $83.27, according to Plains All American.

Natural gas prices suffered a weekly decline, falling 64 cents on Tuesday to $8.145 per Mcf, followed by a further drop of 30 cents on Wednesday to $7.842 per Mcf. Prices began to recover, rising 7.3 cents on Thursday and another 8 cents on Friday to close at $7.996 per Mcf, from $8.786 at last Friday’s close. This is still above the average of $5.16 per Mcf Henry Hub spot price reported by the Energy Information Administration (EIA) for last September and $1.96 in September 2020.

“We are pleased that natural gas prices are strong,” said Ken Waits, president and CEO of Mewbourne Oil, which drills in southeastern New Mexico as well as Loving and Reeves counties in New Mexico. Texas.

“We produce a lot of associated gas,” he observed in Midland this week for a Midland Wildcat Committee reception honoring his company.

He said the impact of rising natural gas prices is that society is more receptive to prospects with higher gas-to-oil (GOR) ratios.

Edward Moya, Senior Market Analyst, Americas, at Oanda, wrote in his daily bulletin that oil prices are rallying on supply risks and perceptions that the US dollar has tentatively topped.

“Lately, it’s been mostly bad news for oil prices, as demand concerns have escalated given the deteriorating COVID situation in China, a surprise jump in inventories and, according to the expectations, world leaders will continue to exhaust emergency measures to drive down energy prices,” he wrote. He noted that the United States. Energy Secretary Jennifer Granholm said President Biden is considering the new versions of the US Strategic Petroleum Reserve (SPR).

Moya cited as a growing risk Russian President Putin’s threat to cut off all energy supplies as Ukraine reclaims territory.

“The risk of some supply disruptions over the next few months remains high and this should help oil prices stay above the $90/barrel level,” he wrote.

The Energy Information Administration forecast in its September short-term energy outlook that West Texas Intermediate should remain in the upper $80s through the end of 2023. The agency said the possibility of energy supply disruptions oil and slower-than-expected crude oil production growth continues to create the possibility of higher oil prices, while the possibility of slower-than-expected economic growth creates the possibility of lower prices.

The agency also forecasts U.S. crude production to average 11.8 million barrels per day in 2022 and 12.6 million barrels per day in 2023, which would set a record for the largest U.S. crude oil production. in one year. The current record is 12.3 million barrels per day, set in 2019.

“We estimate that crude oil prices will generally remain near August average levels through the end of 2023,” the agency wrote in its outlook. Although average crude oil prices are expected to remain mostly between $90 and $100 a barrel through next year, the possibility of significant volatility around those averages is high, the agency said in its outlook. .

He said recent events contributing to increased uncertainty in the crude oil market and in our forecast include:

  • The impact of OPEC’s recent decision to cut crude oil production by 0.1m b/d in October and whether there will be further production cuts in the future
  • The threat of growing conflict following the outbreak of violent clashes in the Libyan capital of Tripoli
  • Uncertainty around the potential expiration of the current coordinated release of oil from strategic reserves in November
  • The potential return to an Iranian nuclear deal that could lift sanctions on the country and allow Iranian crude oil exports to enter the market
  • The risk of hurricanes that could lead to potential production shutdowns and limited export traffic along the U.S. Gulf Coast