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ANS pops into $70s
Fed delivers expected quarter point rate cut, but not desired half point Steve Sutherlin Petroleum News
Alaska North Slope crude popped into the $70s Sept. 16, up $1.21 to close at $70.26 per barrel, while West Texas Intermediate leapt $1.22 to close at $64.52, and Brent jumped $1.03 to close at $68.47.
ANS last hit the $70s Sept. 2, closing at $71.25. The Alaskan benchmark was in the upper $60s most of August.
Brent last saw the $70s July 31 -- with a close of $72.53 -- before plunging into the upper $60s Aug. 1.
The Sept. 16 gains were the culmination of a three-day rise prior to Sept. 17, the date of the announcement from the U.S. Federal Reserve Chairman regarding whether the Fed would adjust its benchmark interest rate or not.
Financial markets had priced in a downward adjustment -- the first of 2025, bullish for equities and commodities -- of a quarter point with 96% certainty due to weak job numbers in August.
On top of a weak job report, U.S. Bureau of Labor Statistics said the U.S. economy added 911,000 fewer jobs over the 12 months ending in March than previously estimated -- the largest revision on record. The whopping BLS revision raised the possibility of a half-point cut in the Fed rate, which would have more strongly stimulated the economy and energy demand, likely sending oil prices higher.
Crude futures were near their Sept. 16 closing prices before the announcement of the expected quarter point cut just after 10:30 am Alaska time Sept. 17, supported by a massive drawdown of U.S. crude inventories. But absent the half point adjustment, crude slipped lower following the Fed remarks.
Stephen Miran, sworn in as a Federal Open Market Committee member on Sept. 15 after being appointed by President Trump to fill a vacancy, was the sole dissenting vote to the quarter point rate cut decision, opting instead for a half point cut.
"Recent indicators suggest that growth of economic activity moderated in the first half of the year; job gains have slowed, and the unemployment rate has edged up but remains low," the FOMC said in a statement, adding, "Inflation has moved up and remains somewhat elevated."
WTI and Brent ended the day Sept. 17 at $64.05 and $67.95 respectively. Both benchmarks continued slightly lower in early Asian trade Sept. 18 as Petroleum News went to press.
Massive U.S. crude drawdown U.S. commercial crude oil inventories for the week ended Sept. 12 staged a massive surprise drawdown of 9.3 million barrels from the previous week to 415.4 million barrels -- 5% below the five-year average for the time of year, according to data released Sept. 16 by the U.S. Energy Information Administration.
Analysts surveyed by the Wall Street Journal had -- on the average -- expected crude inventories to be unchanged.
Total motor gasoline inventories decreased by 2.3 barrels for the period to 217.7 barrels -- 1% below the five-year average for the season, the EIA said.
Distillate fuel inventories increased by 4 million barrels to 124.7 million barrels -- 8% below the five-year average for the time of year.
The Wall Street Journal poll had called for no change in gasoline stocks and a build in diesel.
The crude price runup going into the Fed announcement was further supported by a slide of the dollar against the Euro and other currencies. A lower dollar is bullish for oil, which is priced in dollars -- which must be purchased by holders of foreign currencies to buy crude.
Geopolitics also played a role, as Ukraine successfully hit Russian oil facilities to further interrupt Russia's number one source of foreign currency.
ANS gained 74 cents Sept. 15 to close at $69.05, as WTI gained 61 cents to close at $63.30, and Brent added 45 cents to close at $67.44.
On Sept. 12, ANS rose 30 cents to close at $68.31, WTI rose 32 cents to close at $62.69, and Brent rose 62 cents to close at $66.99.
The specter of demand destruction was not absent from the trading week, however. ANS plunged $1.43 Sept. 11 to close at $68.01, as WTI plunged $1.30 to close at $62.37, and Brent plunged $1.12 to close at $66.37.
Crude had an up-day Sept.10, seeing ANS up 93 cents to close at $69.44, as WTI jumped $1.04 to close at $63.67 and Brent jumped $1.10 to close at $67.49.
ANS gained $1.75 over the trading week from a close of $68.51 Sept. 9, to $70.26 Sept 16.
ANS closed at a $5.74 premium over WTI Sept. 19, and at a $1.79 premium over Brent.
Indy producers drive U.S. upstream Independent oil and gas producers have been the primary force in the U.S. upstream in 2022 through 2024, lifting some 85% of crude and 90% of gas.
Per a Rystad Energy study commissioned by the American Exploration Production Council, independents operated 95% of producing onshore wells and drilled 90% of new wells, World Oil reported Sept. 16.
Independents will support 3.1 million jobs this year, pay $129 billion in taxes and contribute $488 billion to gross domestic product, Rystad said.
"Independents are the backbone of America's oil and natural gas production and the economic strength it delivers," said Anne Bradbury, CEO of AXPC. "Their contributions go far beyond reliable energy -- they create millions of jobs and deliver revenues that strengthen communities nationwide."
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