Crude Oil Climbs as US Equities Advance, Dollar Retreats

(Bloomberg) - Oil advanced as U.S. stocks rebounded from the biggest rout since June and as the dollar retreated against its peers.

Futures closed 0.9 percent higher in New York, after dropping as much as 2.5 percent earlier. Equities climbed as Federal Reserve Governor Lael Brainard counseled continued prudence in tightening monetary policy. The U.S. currency erased a 0.3 percent gain, making commodities more appealing as an investment. Prices declined earlier after U.S. producers increased drilling and OPEC boosted its estimate for rivals’ output next year.

"Crude is along for the ride with equities," said John Kilduff, partner at Again Capital LLC, a New York hedge fund focused on energy. "Friday’s move seemed a bit overdone. Markets have been on tenterhooks because of concerns about central bank policies, but some calm has returned today."

Oil has fluctuated since rallying in August amid speculation the Organization of Petroleum Exporting Countries and Russia would agree on measures to stabilize the market later this month. All solutions are possible, Algeria’s energy minister said Friday when asked if producers could raise output within the framework of a freeze. A deal to cap production was proposed in February but a meeting in April ended with no final accord.

West Texas Intermediate for October delivery rose 41 cents to $46.29 a barrel on the New York Mercantile Exchange. Total volume traded was 40 percent above the 100-day average at 2:53 p.m.

Rig Count

Brent for November settlement increased 31 cents, or 0.6 percent, to $48.32 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $1.48 premium to WTI for November delivery.

“The case to tighten policy preemptively is less compelling” in an environment where declining unemployment has been slow to spur faster inflation, Brainard said Monday, according to the text of her prepared remarks in Chicago. She made no reference to a specific meeting of the policy-setting Federal Open Market Committee. Policy makers will gather in Washington Sept. 20-21 to discuss their monetary policy stance

For a story on the resilience of U.S. oil production amid low prices, click here.

Rigs targeting crude rose for a second week to 414, the most since February, according to data from Baker Hughes Inc. The count climbed by seven last week, boosting the numbers of machines added since the start of July to 84, according to the energy-services company.

Changing Projections

OPEC flipped its forecasts for rival supplies in 2017. Production from outside the group will grow by 200,000 barrels a day next year, compared to a drop of 150,000 a day projected a month ago. The gain is driven by the startup of the Kashagan oil field in Kazakhstan. That means the organization’s total output of 33.24 million barrels a day in August was 757,000 a day higher than the average amount the world will need from OPEC in 2017.

The longer OPEC and other producers talk about a ceiling on crude output, the more doubts grow in the market. Money managers increased wagers on falling WTI prices by the most in three months as a meeting between Russia and Saudi Arabia last week ended without specific measures to support the market.

Oil-Market News

Forces loyal to a powerful Libyan military commander captured two key oil ports from rival fighters, deepening turmoil in the North African nation’s oil industry. Shell Pernis aims to complete major maintenance work in mid-November. The refinery, Europe’s largest, is currently doing major work at some of its units for the coming months, according to a message on a community hotline. Total SA is considering selling down its 51 percent stake in an offshore oil and gas field in Norway’s North Sea, people familiar with the matter said, as the French oil giant disposes of assets to offset a slump in crude prices.

- With assistance from Grant Smith. To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net To contact the editors responsible for this story: Carlos Caminada at ccaminada1@bloomberg.net Susan Warren

Copyright 2016 Bloomberg News.

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Brent Crude Oil : $54.46/BBL 0.96%
Light Crude Oil : $51.68/BBL 1.21%
Natural Gas : $3.44/MMBtu 1.99%
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