The monthly average U.S.-dollar price of West Texas Intermediate (WTI) crude oil increased by $5.32 (+7.0%) to $81.39/barrel in August. That advance occurred within the context of a somewhat stronger U.S. dollar (broad trade-weighted index basis -- goods and services), the lagged impacts of June’s increase of 320,000 barrels per day (b/d) in the amount of petroleum products demanded/supplied (to 20.7 million b/d), and accumulated oil stocks that continued trending downward below the midpoint of the five-year average range (August 2023 average: 435 million barrels).
Selected
highlights from the 1 September 2023 issue of OilPrice.com’s Oil &
Energy Insider include:
Continuous U.S. stock draws equivalent to a 1 million b/d decline over the past five weeks have led to an unusually tight oil market in the United States, adding upward pressure to oil prices despite economic woes. Widespread expectations of OPEC+ extending production and export cuts as well as recovering Chinese manufacturing activity have added to the bullish sentiment, with ICE Brent surpassing $87 per barrel.
Russia Flags OPEC+ Coordination on Track. Russia's deputy prime minister Alexander Novak announced
that OPEC+ members have agreed on the main parameters of production over the
upcoming months but would only announce it next week, indicating Riyadh's and
Moscow's cuts are to continue.
Higher Interest Rates Prompt LNG Plants to Hike Fees. A string of US LNG developers, most notably
NextDecade with its Rio Grande LNG project, adjusted term deals signed earlier
and increased liquefaction fees to reflect rising interest rates and higher
construction costs.
Japan Extends Oil Subsidies Until End-2023. Japan's Trade and Industry Ministry (METI) extended oil product subsidies until the end of December 2023 as retail gasoline prices soared to the highest readings ever this week, reaching $200 per barrel, boosted by higher oil prices and a weaker yen.
The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.
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