Oil ended the session unchanged after choppy trading with traders focused on adjusting US crude options positions ahead of expiration.
Futures in New York closed flat on Thursday after falling as much as 1.5% earlier in a rally in the US dollar. Nearly 312 million barrels of first-month Nymex West Texas Intermediate crude options, instruments used by investors to hedge their positions in the futures market, will expire on Thursday.
“The earlier liquidation of oil futures was in response to the dollar’s rally. But now the market is experiencing some balancing of positions ahead of the expiration of WTI options today, which is erasing some of those declines, ”said Spencer Vosko, director of crude oil at Black Diamond Commodities LLC in Houston.
Crude futures this month were supported by signs of tightening US inventories after storms swept through the Gulf of Mexico, crippling the energy sector. The global oil market is expected to remain tight until the end of the year despite production increases expected by OPEC + producers, in part because of these storm-related blackouts, as it will take some time for a full takeover, according to Commerzbank AG.
- West Texas Intermediate crude for October stabilized at $ 72.61 per barrel in New York
- Brent for November settlement added 21 cents to end the session at $ 75.67 a barrel
Investor optimism is also evident in the widening of the main oil lead times in a stronger upward shift pattern. For example, West Texas Intermediate crude for December delivery has moved to the wide premium of the December 2022 contract since July.
High prices for gas, liquefied natural gas and oil are expected to last “for a while” as producers resist the urge to drill again, Chevron Corp. CEO Mike Wirth told Bloomberg. Norwegian company Equinor ASA said on Thursday it also expects European gas prices to remain high during the winter.
(With help from Sharon Cho. © 2021 Bloomberg LP)