Oil prices climbed back toward two-month highs Friday as investors wagered that this weekend’s meeting of major oil producers in Algeria won’t do much to reverse a trend toward tighter global supplies.
Light, sweet crude for November delivery settled 0.7% higher at $70.78 a barrel on the New York Mercantile Exchange. Brent crude, the global benchmark, rose 0.1% to $78.80 a barrel.
The U.S. benchmark oil price has risen four of the past five weeks, is 8% higher from one month ago.
A monitoring committee meeting on Sunday between the Organization of the Petroleum Exporting Countries and nonmembers, including Russia, is expected to feature discussions around offsetting lower Iranian exports with production elsewhere. Added production could have the effect of lowering oil prices, though much would depend on the size of any output increase.
Oil prices were higher across the board early Friday morning but fell briefly midmorning after a report from Reuters, citing unnamed sources, indicated OPEC and nonmembers would be discussing raising output by 500,000 barrels a day. But analysts said skepticism remains that any major output boost will be agreed upon at the meeting, and oil prices soon rebounded.
An oil production platform at the Soroush oil fields in the Persian Gulf. Russia and Saudi Arabia have ramped up production this summer. Photo: raheb homavandi/Reuters
President Trump inserted Washington’s position into the discussion on Thursday, posting a tweet that said OPEC should stop constantly pushing for higher oil prices, and demanding that “the OPEC monopoly must get prices down now!”
U.S. oil prices have risen by $20 a barrel over the past 12 months, helping send the average gasoline prices for drivers in the U.S. toward a multiyear high of $2.88 a gallon Friday. That is 30 cents a gallon more than this time last year, according to price-tracking firm GasBuddy.
Stewart Glickman, head of energy research at CFRA Research, said such tweet storms by Mr. Trump on oil prices in advance of the U.S. midterm elections in November could pressure the Saudis to expand production. But he said that doesn’t mean that the Saudis can or will do so.
“We are not optimistic that Saudi Arabia will agree to sharply boost production, even as it owns the lion’s share of global spare capacity, around 60%, per the IEA,” said Mr. Glickman. “The problem? Opening up the spigots might not be sustainable and imperil long-term production capabilities.”
Russia and Saudi Arabia already ramped up production this summer to compensate for some of the lost Iranian barrels, but other analysts agree that additional production capacity may be limited.
Iran’s oil shipments have fallen by about 500,000 barrels a day between April and August ahead of U.S. oil sanctions that officially will begin in November, according to data from the International Energy Agency.
Goldman Sachs forecast a near-term Brent price of $80 a barrel in a note, citing strong U.S. demand growth combined with constrained domestic production, and losses from Iran due to sanctions.
Oil prices pared some of their gains Friday afternoon after Baker Hughes reported that the number of total, active oil rigs in the U.S. declined by one in the latest week, to 866. Despite the overall decline, oil rigs in the Permian Basin of west Texas and New Mexico rose by five to 488. That’s the highest rig count in the Permian since January 2015, and points to further production increases in the U.S.’s most prolific oil-producing region.
Among refined products, gasoline futures for October delivery rose 0.1% to $2.0171 a gallon. Diesel futures fell 0.1% to $2.2260 a gallon.
Corrections & Amplifications
Stewart Glickman is head of energy research at CFRA Research. An earlier version of this article misspelled his first name as Steward. (Sept. 21, 2018)