Oil prices relative to gas

  • Crude oil prices remain capped at around $50 per barrel despite attempts by OPEC to engineer an agreement that would lift them. Because of this, the spread between oil and gas remains relatively narrow. ICE Brent crude oil futures remained at a $3.95/MMBtu premium to the ICE gas NBP contract in the first half of September, little changed from levels seen in August. The spread is expected to narrow to around $3/MMBtu over the winter, when gas demand tends to boost prices relative to crude oil and oil products.
  • OPEC representatives will gather on the sidelines of the International Energy Forum in Algeria on 24-26 September. They will use the event, a meeting of oil and gas producers and consumers, to hold further talks on a possible agreement to freeze production, even though members failed to reach a planned agreement earlier this year. Algeria’s oil minister has said OPEC may convene an emergency meeting immediately after the IEF if the talks result in an agreement. However, this seems unlikely given the low level of Nigerian and Libyan production and the ambitions of Iran and Iraq to boost their output.

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