After plummeting $1.50 on Friday, crude prices are up slightly to $45.99 this morning, a gain of 22 cents over Friday’s close. Markets fell dramatically ahead of OPEC’s meeting this weekend as markets expected no constructive announcements. Prices opened at $45.62, nearly $1.30 (2.8%) below Friday’s opening price of $46.91.
Diesel price and gasoline prices both gave up heavy losses on Friday, with diesel falling 3.75 cents (2.7%) to close yesterday at $1.5152. Gasoline experienced similar losses, shedding 4.3 cents (2.7%) from early morning highs to end the day at $1.5633. Both products are trading relatively flat this morning, with heating oil up 45 points and gasoline down just 63 points.
Markets are awaiting concrete announcements from the OPEC/NOPEC meeting that has been in session since Saturday. So far, information shared from the meeting has been relatively bullish—Saudi Arabia has promised to cap exports at 6.6 MMbpd in August, one million lower than the same time last year. These cuts are to exports, not production; Saudi Arabia can still produce more crude oil to meet domestic needs.
Nigeria and Libya have both agreed to cap their production, albeit at levels far above their current rates. Nigeria has agreed to a 1.8 MMbpd cap (200 kbpd above current levels), while Libya agreed to cut production above 1.25 MMbpd (400 kbpd above current levels).
Markets certainly weren’t helped on Friday by Baker Hughes’ announcement of a 1 rig reduction in the weekly rig count. Rig counts are a stand-in for for-term production trends. After rising for 23 straight weeks, rig counts fell in early July; this now marks the second decline over four weeks. While a 1 rig reduction isn’t substantial, it signals a marked break from the rapid increases seen earlier in 2017.