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Higher U.S. oil exports, Great Lakes market, pulling gas prices higher
by Daniel J. Graeber
Washington (UPI) Oct 31, 2017

Production sentiment dims rally for oil prices
Washington (UPI) Oct 31, 2017 - Quarterly sentiment about higher production moving forward and warnings about the economic impact of OPEC cuts sent oil prices slightly lower early Tuesday.

Traders have been watching the balance between supply and demand closely given the effort by the Organization of Petroleum Exporting Countries to drain the surplus through coordinated production cuts. A survey of analysts from commodity pricing group S&P Global Platts showed an expected drain on U.S. commercial crude oil inventories of 1.4 million barrels and a fall of 1.7 million barrels for gasoline.

A report from the U.S. Energy Information Administration last week said crude oil production, meanwhile, could move higher along with crude oil prices. Brokers, for their part, said the market may be reaching a point of stimulus, a sentiment backed Tuesday by British energy company BP.

"Looking ahead, we expect fourth-quarter reported production to be higher than the third quarter reflecting the continued ramp-up of major projects and recovery from seasonal turnaround and maintenance activities," the company said in its quarterly report.

The price for Brent crude oil was down 0.36 percent minutes before the opening bell at $60.37 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 0.24 percent to $54.03 per barrel.

OPEC ministers for much of the latter half of October have suggested the production agreement that helped drive oil prices higher could be extended further into 2018. The International Monetary Fund suggested, however, that the cuts were hurting some major oil exporters in the Middle East.

"Overall growth in oil exporters is expected to bottom out at 1.7 percent in 2017, driven by lower oil output under the OPEC-led agreement," the report read. "In contrast, non-oil growth is expected to recover to about 2.6 percent in 2017 as the pace of budget deficit reduction slows."

For oil exporters in the region, the IMF said budget deficits jumped from 1.1 percent of gross domestic product to 10.6 percent of GDP last year. That deficit may shrink this year, but the IMF said oil exporters will still need to be disciplined.

The forecast from Platts will be tested late Tuesday when the American Petroleum Institute releases its figures. Official data from the EIA is published midway through the morning session Wednesday.

Record-setting U.S. oil exports, a spike in crude oil prices and lower inventories in the Great Lakes means higher retail prices for gasoline, analysts said.

Motor club AAA reports a national average retail price for regular unleaded Tuesday at $2.47 per gallon, slightly higher than last week, but about 10 cents per gallon lower than this time in September. Gasoline prices usually move lower across the country as demand slumps at the end of summer, though hurricanes that battered the dense network of refineries in the southern U.S. in September disrupted seasonal trends.

"The price volatility can be attributed to a new trend that has emerged during October in the last few years, which is an unexpectedly steady demand for gasoline after the end of the summer driving season," AAA spokesperson Jeanette Casselano said in a statement.

AAA reports about half of the U.S. states reported an increase in the price at the pump, with the largest spikes showing up in the Great Lakes region. Ohio prices jumped 12 cents per gallon from last week and the region as a whole is showing gasoline inventories are 4.6 million barrels below what they were this time last year.

Patrick DeHaan, a senior petroleum analyst at GasBuddy, said higher crude oil prices are behind some of the spike in retail gas prices. The price for crude oil moved above $60 per barrel last week for the first time in more than two years. Meanwhile, the United States is sending more of its own crude oil to the global market, which means less is available at home.

"Without the ability to export crude oil, inventories in the U.S. would have continued to increase, keeping pressure on oil prices, but without such protection, oil is flowing out of the U.S. at record pace," he said in an emailed market report.

Markets battered by September hurricanes are recovering, meanwhile, though inventory levels moved lower last week because of higher exports. The market is still oversupplied, however, compared with last year.

While the West Coast remains the most expensive market in the country, that market too is oversupplied when compared with last year. Consumer demand, however, is holding retail gas prices higher, but stable.

"Despite the fluctuation, AAA forecasts that the national average gas price will decrease as the holidays approach," the motor club said.

Raton Basin earthquakes linked to oil and gas fluid injections
Boulder CO (SPX) Oct 26, 2017
A rash of earthquakes in southern Colorado and northern New Mexico recorded between 2008 and 2010 was likely due to fluids pumped deep underground during oil and gas wastewater disposal, says a new University of Colorado Boulder study. The study, which took place in the 2,200-square-mile Raton Basin along the central Colorado-northern New Mexico border, found more than 1,800 earthquakes up ... read more

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