Sanctions boost ANS
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Another run into $70s, but OPEC+ may spoil the party with more production
Steve Sutherlin Petroleum News
Alaska North Slope crude staged a strong surge into the $70s Sept. 2, leaping $1.42 to close at $71.25 per barrel. West Texas Intermediate leapt $1.58 to close at $65.59, and Brent jumped $1.02 to close at $69.14.
Trader's hopes were bolstered by U.S. sanctions on shippers of Iranian oil designed to staunch the flow of Iranian exports.
On Sept. 3, however -- in a reversal of expectations -- eight members of the Organization of the Petroleum Exporting Countries and its allied exporting nations are considering a boost in output starting in October -- to be determined at a Sept. 7 meeting, two sources familiar with the discussions told Reuters.
OPEC+ had already increased output targets by some 2.2 million barrels per day over April to September, in addition to a 300,000-bpd quota increase for the United Arab Emirates, Reuters reported.
Despite the accelerating production increases, Middle Eastern crude prices have remained the strongest regional prices globally, bolstering the confidence of Saudi Arabia and other OPEC members to boost output, according to a Haitong Securities report.
That news sent futures prices downward on Sept. 3. WTI shed $1.62 to close at $63.97 and Brent shed $1.54 to close at $67.60.
U.S. economic data released Sept. 3 was weaker than expected, potentially negative for energy demand. July job openings fell by 176,000 to a 10-month low of 7.181 million, against expectations of 7.380 million, Barchart reported Sept. 3.
July factory orders fell 1.3% month over month, the second straight month of reductions.
The bearish effects of the poor financial data may be counterbalanced by elevated potential for the U.S. Federal Reserve to order a rate cut at its Sept.16-17 meeting, which would likely lead to heightened economic activity.
Federal Reserve Governor Christopher Waller, a candidate to take over as chair in 2026, voiced his support Sept. 3 for starting a rate-cutting cycle at the September meeting, saying the central bank has the flexibility to adjust that pace in the future, CNBC reported.
U.S. crude inventories rose by 622,000 barrels in the week ended Aug. 29, market sources told Reuters, citing American Petroleum Institute figures.
U.S. Energy Information Administration inventory data will be delayed until Sept. 4, due to the Labor Day holiday shortened week.
Analysts answering a Reuters poll estimated, on average, that U.S. crude inventories fell by 2 million barrels.
ConocoPhillips said it would reduce its workforce by as much as 25% by yearend 2026 to trim costs, due to a lower oil price environment. It said most of the 2,600 to 3,250 job cuts affecting full-time staff and contractors would be made in 2025.
"We are always looking at how we can be more efficient with the resources we have. As part of this process, we have informed employees that a 20 to 25 percent reduction in our global workforce, which includes employees and contractors, is anticipated," the company said.
Sources of support Crude prices are supported on concerns that continuing war in Ukraine could lead to new sanctions on Russian energy exports, reducing global supply, Barchart reported.
U.S. Treasury Secretary Bessent said Sept. 2 that the United States "will be examining sanctions on Russia closely this week."
President Trump has threatened "very big consequences" if Russia doesn't come to the negotiating table.
On Sept. 29, German Chancellor Merz and French President Macron threatened secondary sanctions on Russia, targeting "companies from third countries that support Russia's war."
Physical supply disruption also is bullish for prices. Ukrainian drone and missile attacks on Russian facilities have shrunk Russia's crude-processing runs to 5.09 million bpd in the first 27 days of August, the lowest monthly average in 3.25 years.
ANS fell 40 cents Aug. 29 to close at $69.83, as WTI fell 59 cents to close at $64.01, and Brent fell 50 cents to close at $68.12.
On Aug. 28, ANS gained 51 cents to close at $70.23, WTI gained 45 cents to close at $64.60, and Brent gained 57 cents to close at $68.62.
ANS added 52 cents Aug. 27 to close at $69.72, while WTI jumped 90 cents to close at $64.15, and Brent jumped 83 cents to close at $68.05.
ANS gained $2.05 over the trading week from its close of $69.20 on Aug. 26 to a close of $71.25 Sept. 2.
ANS traded at a $5.66 premium over WTI on Sept. 2, and at a premium of $2.11 over Brent.
Crude futures prices extended their slide in Asian trade Sept. 4 as Petroleum News went to press. WTI and Brent were down by more than 1%.
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