The FINANCIAL — Oil prices rose on September 15, as signs of U.S. production cuts and bargain buying helped lift the market from a two- week low, according to Nasdaq.
Light, sweet crude for October delivery settled up 59 cents, or 1.3%, to $44.59 a barrel on the New York Mercantile Exchange Brent, the global benchmark, gained 26 cents, or 0.6%, to $46.63 a barrel on ICE Futures Europe.
The U.S. Energy Information Administration said on Monday that production from several important shale-oil fields is likely to fall by 80,000 barrels a day by next month. The Eagle Ford shale in Texas, one of the hottest spots for oil during the U.S. drilling boom, has now dropped for seven straight months, down 17% over that time, according to ClipperData’s Tuesday analysis.
It is very surprising Eagle Ford has had the steepest declines, Simmons & Co. International said on Tuesday in a research note.
Many speculators have made big bets throughout the year that the collapse of oil prices, which are down about 60% from 2014’s highs, would force U.S. shale producers to slow down activity, leading to lower output and recovering prices as the market rebalances.
“The rise in oil prices is inevitable unless something drastic happens, and the recovery could even come this week if the U.S. Federal Reserve decides not to increase interest rates,” said Michael Nielsen, a senior oil derivatives trader at the Copenhagen-based Global Risk Management.
The Federal Reserve two-day policy meeting concludes on Thursday and trading has been limited ahead of its outcome, analysts and brokers said. Traders have been closing out positions to avoid getting caught on the wrong side of a market reaction that is tough to predict, brokers said.
After hitting a two-week low on Monday, prices are apt to make a small bounce as traders consolidate positions, analysts and brokers added. Bargain buying has also kept demand up at Midwestern refineries, meaning more support for prices, said Jim Ritterbusch, president of energy-advisory firm Ritterbusch & Associates.
U.S. prices briefly dipped in the afternoon after the White House said it would oppose a new bill that would open up U.S. oil exports for the first time in 40 years. The Obama administration wants the Commerce Department to make the export decision, not Congress, it said.
Brent oil, which competes for customers among U.S. gasoline-makers, also rose from losses to small gains after the news. But the impact was minimal and U.S. prices rebounded quickly. Even if approved, exports are months away from starting up and shouldn’t impact supply-and-demand for near-term trading, said Scott Shelton, broker at ICAP PLC.
“It’s just a headline generating noise,” he said. “The market’s on hold in a lot of ways because of the Fed.”
Others pointed to positive signs from data tracking the number of bullish and bearish bets. London’s International Commodities Exchange and the U.S. Commodity Futures Trading Commission show that from mid-August to Sept. 8, the number of short positions has dropped by 33,000 contracts to 97,000 in London and 30,000 to 129,000 in New York.
Gasoline futures settled up 2.86 cents, or 2.2%, at $1.3329 a gallon. Diesel futures fell 0.35 cent, or 0.2%, to $ 1.50 a gallon.
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