Citi Says You Should Get Ready for an Oil Squeeze

As of noon on Monday, Brent crude was trading at $57.57 per barrel, an increase of $1.15 from Friday's trading price of $56.42.

The front-month in US crude's West Texas Intermediate (WTI) futures settled down $0.14, or 0.3%, at $50.55 a barrel on the New York Mercantile Exchange. The official said that OPEC members are compliant with their lower production quotas at an "acceptable" level, but rising supply from Libya and Nigeria is hampering the cartel's efforts to rebalance the oil market. Nigeria, which said it would join the cuts once its daily output rate reached 1.8 million bpd, produced 1.86 million bpd, secondary source data suggested.

CPC said that its average price for crude oil was US$55.02 per barrel this week, up from US$53.7 per barrel last week.

Phil Flynn, a senior market analyst for the PRICE Futures Group in Chicago, said in an emailed market report the closures are adding support for Brent crude oil prices because of European demands and putting strains on the overall market as it looks to make up for the unevenness triggered by weather in the United States. But Hurricane Harvey's strike on Texas last month was a game changer as flooding from the storm shut down a quarter of the USA oil refining capacity of nearly 18 million bpd, sparking huge drawdowns in fuel inventories and prompting refiners to process as much crude as they could on their return.

The EIA (U.S. Energy Information Administration) estimates that Cushing crude oil inventories rose by 703,000 barrels to 59.7 MMbbls (million barrels) on September 8-15, 2017.

Markets were also eyeing developments in North Korea.

Those risks have risen in the past two days after Iraq on Sunday urged countries to stop oil trade with its autonomous Kurdistan region in retaliation for the vote, and Turkish President Tayyip Erdogan threatened on Monday to cut off the Ceyhan pipeline that carries the Kurdish region's entire oil output to the outside world.

  • Rogelio Becker