September, 2016

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US crude settles at more than one-month high of $47.83 on OPEC deal optimism

Martin Divisek | Bloomberg | Getty Images

Oil prices settled at a more than one-month high on Thursday as optimism over an OPEC plan to limit output was offset by questions over its ability to rebalance a heavily over-supplied market.

The Organization of the Petroleum Exporting Countries agreed on Wednesday to cut output to 32.5 to 33 million barrels per day (bpd) from around 33.5 million bpd, estimated by Reuters to be the output level in August.

OPEC said other details of the plan will be known at its policy meeting in November, leaving unanswered when the agreement will come into effect, what new quotas for member countries will be and for what periods, and how compliance will be verified.

Earlier in the day, oil was down, with crude futures retreating from their 6-percent gain on Wednesday, the biggest in a day since April. A steady dollar and weak U.S. stock market also limited some of the upside in oil in early trading.

Will the oil rally continue?

Will the oil rally continue?   

Global benchmark Brent crude oil was up 36 cents a barrel at $49.05 by 2:58 p.m. ET (1858 GMT). The contract earlier rose to $49.81, the highest intraday level since Sept. 8.

U.S. light crude oil settled up 78 cents, or 1.7 percent, at $47.83 a barrel, the highest close since Aug. 23.

Many analysts said there remained a lack of clarity over details, as well as a risk the deal could unravel. Moreover, if oil prices were to rise, it could also lead to a surge in non-OPEC output, they said.

“With such uncertainty around the minutiae, we expect uncommon volatility in the oil market until OPEC’s November meeting,” analysts at ING said.

An invitation to join the cuts could also be extended to non-OPEC countries such as Russia.

Russian Energy Minister Alexander Novak said on Thursday Russia is aiming to keep its oil production at near-record levels despite OPEC’s decision to modestly reduce its output.

He said Moscow was ready to consider proposals from OPEC for joint action on the oil market and would hold consultations with the group in October and November.

Again Capital Founding Partner John Kilduff said he did not see any fundamental reason for the rise in prices on Thursday. In his view, continued Russian production of 10.7 million barrels a day would not help to rebalance markets.

Pro: Bullish aspects of oil market more probable

Pro: Bullish aspects of oil market more probable   

U.S. bank Goldman Sachs said it expected the OPEC deal to add $7 to $10 to oil prices in the first half of next year.

“We think that OPEC is running a dangerous game if the aim is to push the crude oil price higher from here in the short term as it would just activate more U.S. shale oil production,” said Bjarne Schieldrop, chief commodity analyst at Nordic bank SEB.

And a cut in OPEC production might do little to reduce oversupply, given uncertainty about output from Iran, Libya and Nigeria.

“The problem of surpluses will not be solved if these countries take full advantage of their capacities,” Commerzbank chief commodities analyst Eugen Weinberg said.

— CNBC’s Tom DiChristopher contributed to this report.

Oil shares pull Asian stocks higher; yen slips

By Saikat Chatterjee | HONG KONG

HONG KONG Oil shares pulled regional stock markets higher on Thursday after OPEC members agreed to curb output in a surprise deal, though investors were wary of chasing markets higher as the U.S. presidential election neared.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.9 percent by mid-morning, thanks to a bounce in energy shares, but other markets such as Hong Kong were trading near the day’s lows after an early jump.

Stocks in Europe were expected to open higher following Asia.

“Despite the favorable oil deal, foreign institutional investors are sticking to their favorite counters before the U.S. elections results as there is simply too much market uncertainty,” said Andrew Sullivan, managing director, sales trading at Halting International Securities Group in Hong Kong.

Japan’s Nikkei climbed 1.5 percent, after losing 1.3 percent the previous day. In Hong Kong, the benchmark index was up 0.5 percent with energy-related shares the biggest gainers.

Oil futures retreated in Asian trade as the market grew more skeptical of the deal, pondering how the group agreed to limit production and how OPEC would implement such a plan. [O/R]

“Investors and traders are skeptical – with good reason. More cynical traders are questioning the complete lack of detail, including the potentially problematic question of which nations will curtail production,” Michael McCarthy, chief market strategist at Sydney’s CM Markets, told Reuters.

Though OPEC’s first agreement to cut production since 2008 drove risky assets initially higher, the lack of detail made some investors wary.

Brent crude eased slightly after earlier climbing to a high of $49.09 when the market opened, its highest since Sept. 9. WTI crude edged lower to $46.99 a barrel, after first hitting $47.47, its highest since Sept. 8.

“I think the markets are still not fully convinced,” said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank.

Still, the jump in oil prices boosted risk assets and undermined the yen, which is often seen as a safe haven at times of economic stress.

The dollar rose 0.7 percent to 101.38 yen, extending its rebound from one-month low of 100.085 touched on Tuesday.

The euro was higher at $1.12305, recovering from Wednesday’s low of $1.1182 helped in part by rebound in shares of Deutsche Bank.

($1 = 7.7538 Hong Kong dollars)

(Additional reporting by Keith Wallis in SINGAPORE and Hideyuki Sano in TOKYO; Editing by Eric Meijer and Kim Coghill)

China likes to stockpile crude oil whenever prices are at $50 or lower

 

It’s certainly something the Chinese have adopted when it comes to crude oil market, or at least the first half of the statement.

Just have a look at the chart below from Barclays as evidence. It shows Chinese crude stocking, based on the average daily build seen in recent years.

barclays china crude restocking v price yearly average Business Insider Australia

It’s easy to see the relationship. As the average Brent crude price has fallen since 2014, Chinese restocking has surged, jackknifing higher in 2016.

“The latest data released for China show the nation’s implied crude stock building rate accelerating to 1.1 mb/d [million barrels per day] for the month of August,” said Miswin Mahesh and Michael Cohen, commodity analysts at Barclays.

“The stocking rate is higher than the year-to-July rate of 780 kb/d, and the 440 kb/d averaged over June and July. The jump in August is a result of teapot refineries re-stocking, refinery maintenance, completion of storage facilities as well as the low oil price environment.”

“Teapots”, as they are are known, are independent oil refineries operating in the country, and account for around 20% of China’s refining capacity.

On the last factor — cost — Mahesh and Cohen found that the pace of inventory restocking is strongly linked to Brent prices, both from a monthly and yearly perspective.

“Since the price fall in 2014, China’s implied crude stock build has increased significantly. On a monthly basis, it appears that $50/bbl Brent is a key price level, below which implied crude build tends to remain at elevated levels,” they say.

This chart from Barclays plots monthly changes in Chinese crude inventories versus changes in the average Brent price. It’s clear what levels the Chinese are buying at.

barclays china crude restocking v price Business Insider Australia

And Mahesh and Cohen believe stockpiling will continue as the government strives to meet its 2020 target of 90-100 days of net import cover, something that currently sits at just a third of that level, according to Barclays.

“We see crude oil stocking rates by China averaging at least 400 kb/d over Q4 2016 and 2017, and our analysis suggests that the pace of China’s stocking activity will be linked to the price of oil rather than the completion dates of its Strategic Petroleum Reserve (SPR) sites,” they wrote.

US oil settles at $45.93 a barrel, up $1.45, or 3.26%

Oil biggest driver of the market this week: Pro

Oil biggest driver of the market this week: Pro   

Oil prices rallied nearly 4 percent at their peak on Monday as the world’s largest producers gathered in Algeria to discuss ways to support the market, with nervous trade driving volatility to its highest since exporters met in April.

Skepticism about any deal being reached has prompted money managers to cut their bullish bets to a one-month low last week, when prices fell by nearly 5 percent, dented by signs Saudi Arabia and Iran were making little progress in achieving a preliminary agreement to freeze production.

Members of the Organization of the Petroleum Exporting Countries are meeting informally on the sidelines of the International Energy Forum in Algeria from Sept. 26-28, where they will discuss a possible deal to limit output.

Iran, which is still ramping up production to where it was in 2012, before the imposition of Western sanctions that lifted in January, downplayed the chances of a deal, although several other members of the group said they still hoped there would be some agreement on how to tackle a global surplus of crude oil.

OPEC Algeria meeting will be a close one

Possibility of OPEC deal in Algeria 50/50: Analyst   

Brent crude futures rose $1.25, or 2.72 percent, to $47.14 a barrel by 2:38 p.m. ET, having rallied from a session low of $45.74, while U.S. crude prices rose $1.26, or 2.83 percent, to $45.74 a barrel.

Implied volatility, one gauge of how much the oil price moves, rose to its highest since April 18, when a meeting in Doha among OPEC members to discuss an output freeze ended in an impasse and the price hit a low just above $40 a barrel.

Unplanned outages across OPEC countries still amount to around 2 million barrels per day, according to SEB commodities strategist Bjarne Schieldrop, which will make it difficult for members that are pumping close to capacity to make way for the potential return of that shuttered output.

“They will come away with nothing, because it is too difficult. How can they decide a freeze when Libya is on the doorstep of returning production, or Nigeria for that matter?” Schieldrop said.

Data from the U.S. Commodity Futures Trading Commission on Friday showed hedge fund managers cut their net long position in crude oil to its lowest in a month, having made the largest weekly addition to their short positions on record.

Russia's $40 oil plan

Russia’s $40 oil plan   

Sources told Reuters on Friday that Saudi Arabia did not expect a decision to be made in Algeria, while Saudi Arabia had offered to reduce production if Iran caps its own output this year, an offer to which Tehran had yet to respond.

“The fact countries like Algeria are still talking about a deal means it’s still on the table regardless of others’ views about what might be happening,” said Jonathan Barratt, chief investment officer at Sydney’s Ayers Alliance.

“I expect Algeria and Venezuela to keep pushing for a deal — it’s imperative for them to keep the price up,” Barratt said.

Algeria urges OPEC decision to stabilise crude oil prices

Algeria’s cordial ties with OPEC members may mean it is well-placed to push for deal

Algerian Energy Minister Noureddine Boutarfa gives news conference on Sunday in Algiers on eve of three-day International Energy Forum and informal meeting of OPEC ministers
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The world’s top oil producers “must take a decision” to stabilise prices, Algeria’s energy minister said on Sunday ahead of an OPEC meeting on Wednesday in Algiers.

Oil prices are already depressed after two years of oversupply amid deep disagreements between members of the Organization of Petroleum Exporting Countries.

Failing to agree on a production freeze could push prices even lower, Noureddine Boutarfa told reporters in Algiers.

“Every state in the organisation agrees on the need to stabilise prices, it just remains for us to find a format that pleases everyone,” he said.

“The best solution would be a (production) freeze”, he said.

Oil prices collapsed from peaks of more than $100 a barrel in mid-2014 to near 13-year lows of less than $30 in January.

As a result, OPEC members are losing between $300m and $500m a day, Boutarfa said.

“No (oil) company will be able to withstand it if prices remain under $50 a barrel,” he said.

Hopes of a deal to limit production pushed prices above $46 a barrel last week, but they slid to $44.48 on Friday as investors’ optimism waned.

Venezuela and Iraq, which have been hard-hit by low prices, support the idea of a production freeze to boost prices.

But an attempt in April to reach a deal, led by OPEC linchpin Saudi Arabia, fell apart when its political rival Iran refused to play ball.

Iran said it needed to bring its production back up to the level it enjoyed prior to Western sanctions over its nuclear programme that have since been lifted.

Algeria’s cordial ties with OPEC members across the board mean it is well-placed to push for a deal.

“We are able to bring together states with political differences around a single table,” Boutarfa said.

OPEC’s 12 member states produce about a third of the world’s oil, and their production decisions have a global impact on prices.

Boutarfa said Wednesday’s summit would be a “first step” towards stability in the market.

“The Algiers meeting will not fail,” he said.

“Either we reach an agreement, which would be good, or we reach an understanding on the elements of an agreement, and that would also be good.”

Oil price rally sparked by U.S. rate decision enters second day

cropped-Energy-Oil-drilling-untitled.png

– UPI.com

By Daniel J. Graeber

Crude oil riding the Yellen train

At least one analyst not buying the rhetoric as Russia shoots down talks of a production cut.

NEW YORK, Sept. 22 (UPI) — Crude oil prices moved higher in early Thursday trading after strong labor data from the United States lent support to a possible rate hike later this year.

U.S. Federal Reserve Chair Janet Yellen said economic growth in the United States was subdued during the first half of the year, but gains in household spending stimulated growth since then.

“Business investment, however, remains soft, both in the energy sector and more broadly,” she said in opening remarks Wednesday afternoon. “The energy industry has been hard hit by the drop in oil prices since mid-2014, and investment in that sector continued to contract through the first half of the year. However, drilling is now showing signs of stabilizing.”

Nevertheless, with steady gains in exploration and production activity offering an indication that the market may have hit bottom, Yellen said that, while rates would be left alone, the economy is expected to expand. Economic data over the past few weeks show pressures on the U.S. economy remain, though recent trends in employment add support to the possibility of a rate increase later this year.

The U.S. Labor Department reported first-time claims for unemployment declined by 8,000 last week to a seasonally adjusted 252,000, the lowest level since July. The less-volatile four-week average declined 2,250 to 258,500.

Crude oil prices extended a rally sparked by Yellen’s comments into early Thursday trading. The price for Brent crude oil moved higher by 1.9 percent to start the day at $47.73 per barrel. The U.S. benchmark price, West Texas Intermediate, gained 2.4 percent to open the day in New York at $46.41 per barrel.

The price movement is in contrast to trends in production. Russia’s deputy energy minister sparked a news media frenzy early Thursday when he said a cut in output was technically possible, though Energy Minister Alexander Novak corrected him later to say there were no proposals to curb production.

In a statement on strategy, French energy company Total said its production was on pace for an average increase of 5 percent through 2019, with more than a dozen new start-ups on the schedule. Libya and Nigeria, two members of the Organization of Petroleum Exporting Countries, are both on the cusp of recovery.

Ministers from OPEC and non-member states could review proposals to keep production rates steady at meetings next week in Algeria. In no uncertain terms, Olivier Jakob, the managing director at Swiss oil-market research group Petromatrix, said in an emailed statement that he was calling the bluff of both the U.S. Federal Reserve and OPEC ministers.

“The U.S. Fed is all about talk and no action and the crude oil market can now speculate for the next two days if the same will characterize the upcoming meeting of OPEC members in Algeria,” he said.

US oil settles at $45.34 a barrel

US oil settles at $45.34 a barrel, up $1.29, or 2.39%

OPEC Iraq

Oil prices were up as much as 3 percent on Wednesday after a surprise drop in crude stockpiles reported by the U.S. government, marking a third weekly decline in the closely watched data.

Prices were slightly higher after the Federal Reserve said it would leave interest rates unchanged. The dollar fell after the announcement, making dollar-denominated commodities, such as crude oil, more affordable to holders of other currencies.

Brent crude futures were up 99 cents, or 2.16 percent at $46.87 per barrel by 2:40 p.m. ET, while U.S. West Texas Intermediate (WTI) crude futures climbed $1.28, or 2.91 percent, to $45.33 a barrel.

The U.S. Energy Information Administration (EIA) said domestic crude inventories fell by 6.2 million barrels for the week ended Sept. 16, versus a 3.4 million-barrel drop forecast by oil market analysts polled by Reuters.

Crude stocks in the world’s largest oil consumer have fallen since this month began. Some 14.5 million barrels were reported drawn for the week ended Sept. 2, the biggest weekly drop in 15 years after a tropical storm that slowed the arrival of oil imports in the U.S. Gulf Coast. In the subsequent week to Sept. 9, there was another decline of 559,000 barrels.

Crude inventories down 6.2M barrels

Crude inventories down 6.2M barrels   

While the draws have put a bullish face of sorts on oil, they also contrast with surging production from OPEC and other major producers such as Russia, causing a swing in crude prices lately.

“We are still very well supplied for this time of year,” said Tariq Zahir, trader in crude oil spreads at Tyche Capital Advisors in New York.

Some market participants were puzzled by the U.S. crude draw when imports as a whole rose and refinery runs fell.

U.S. crude imports rose last week by 77,000 barrels per day, but the rate dropped sharply in the U.S. Gulf, falling about 500,000 bpd to 2.9 million bpd, close to the record low of 2.5 million bpd hit in the week to Sept. 2 when the storm disrupted supplies.

Refinery crude runs fell 143,000 bpd as utilization rates fell 0.9 percentage point but were still high at 92 percent of total capacity.

U.S. gasoline futures rose 2 percent after data showed stocks of the motor fuel fell 3.2 million barrels nationwide, compared with analysts’ expectations for a 567,000-barrel drop.

That contrasted with record builds in the Gulf Coast and record draws in the East Coast, amid a near two-week outage on a key gasoline line that runs from the refining hub in the south to northeast. The line was to reopen on Wednesday.

“The Colonial pipeline mess is evident in the gasoline data, which showed supplies stranded in the Gulf and drawn down in the East. We will have to see if the trends normalize next week,” said John Kilduff, partner at New York energy hedge fund Again Capital in New York.

: CEO

OPEC is a toothless tiger: Expert   

Adding to the upward price momentum was an oil service workers strike in Norway that could impact output from western Europe’s biggest crude producing region.

Key for the market is next week’s meeting in Algeria between producers from the Organization of the Petroleum Exporting Countries (OPEC) and Russia to discuss measures to rein in oversupply, including an output freeze at current levels, but analysts said they did not expect significant results.

“Even with a freeze — which would still mean OPEC production is at record levels — we will still be in an oversupplied market,” said Matt Stanley, a fuel broker at Freight Investor Services (FIS) in Dubai.

Oil prices initially fell in the previous session on pessimism that OPEC members and other major crude producers will reach an output freeze deal during Sept. 26-28 informal talks in Algeria. Saudi Arabia, Iran, Iraq, Nigeria and Libya, five of OPEC’s largest oil exporters, have all raised or been trying to hike output in recent months even while talking of a freeze.

But at midday, short-covering and fresh buying emerged from traders who feared a rally if OPEC announce a deal in Algeria.

OPEC Secretary-General Mohammed Barkindo said he expected the potential freeze deal between OPEC and other producers to freeze output to last one year, longer than previously thought.

Crude Oil Trims Dollar-Linked Losses on Libya Supply Jitters

DailyFX

Fundamental analysis, economic and market themes

Crude Oil Trims Dollar-Linked Losses on Libya Supply Jitters

Monday, Sep 19, 2016 6:18 am +03:00

Gold prices declined as better-than-expected US CPI data triggered an up-shift in the projected Fed rate hike path, pushing the US Dollar higher alongside front-end US Treasury bond yields and undermining support for anti-fiat assets. Crude oil prices were likewise pressured lower but late-day rebound brought the WTI benchmark off its lows following news that clashes at the Ras Lanuf port forced Libya to halt the first shipment from the facility since 2014. News of returning Libyan supply has weighed on prices recently.

Looking ahead, a quiet economic calendar may leave commodities in consolidation mode as traders withhold directional conviction ahead of critical event risk later in the week. Needless to say, the FOMC rate decision takes top billing. A much-anticipated monetary policy review due alongside the BOJ rate decision may also prove market-moving it if related volatility spills out into broader risk on/off gyrations across financial markets. Finally, OPEC-linked news flow is an ever-present catalyst as the cartel’s Algiers meeting draws closer.

What to past gold and crude oil price patterns hint about on-coming moves? Find out here!

GOLD TECHNICAL ANALYSISGold prices have stalled near familiar support in the 1303.62-08.00 area (May 2 high, 38.2% Fibonacci retracement). A break lower confirmed on a daily closing basis exposes the 50% level at 1287.29. Alternatively, a move back above the 23.6% Fib at 1333.62 sees the next upside barrier marked by a falling trend line at 1348.40.

Crude Oil Trims Dollar-Linked Losses on Libya Supply Jitters

CRUDE OIL TECHNICAL ANALYSISCrude oil prices continue to test support in the 42.73-43.02 area (50% Fibonacci expansion, September 1 low). A daily close below this barrier exposes the 61.8% level at 41.26. Alternatively, a reversal back above the 38.2% Fib at 44.20 targets the 23.6% expansion at 46.02.

Crude Oil Trims Dollar-Linked Losses on Libya Supply Jitters

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

 

New York crude oil hub subject to new environmental review

Fox Business

Oil tankersunset-654867_960_720

ALBANY, N.Y. – New York regulators will require an extensive new environmental review of permits originally issued in 2012 that allowed fuel transporters to turn Albany into a major hub for crude oil rail shipments from North Dakota to East Coast refineries.

Department of Environmental Conservation Commissioner Basil Seggos said Friday the agency will require Waltham, Massachusetts-based Global Partners to restart its environmental review process given significant new information about benzene air emissions in a neighborhood near the Port of Albany as well as the hazards of crude oil transport.

“DEC will ensure that this process includes a meaningful and thorough opportunity for public engagement,” Seggos said.

Environmental groups that have harshly criticized DEC’s quiet approval of the company’s original application in 2012 without public hearings hailed Friday’s action as a victory. The 2012 permit allowed Global to quadruple petroleum shipments at the port from 450 million gallons a year to 2.2 billion gallons. Oil trains bring crude from North Dakota’s Bakken Shale region to the port for transport by barge down the Hudson River.

“What DEC has clearly decided is it’s going to completely re-examine the previous permit decisions that have allowed Albany to become the major crude oil hub in the Northeast. That’s huge,” said Kate Hudson of Riverkeeper. “It seems to signal a policy shift in terms of deciding whether this activity has any benefit for New Yorkers.”

Friday’s action comes a month after the federal Environmental Protection Agency accused the company of violating air pollution standards at the Port of Albany, an allegation Global denied. The company did not immediately respond to a request for comment Friday.

DEC said in the new permit application, Global must examine numerous impacts including air emissions, noise and visual impacts, potential for increased greenhouse gas emissions due to handling of heavy tar sands crude, the potential for spills and fires, impact on Albany’s waterfront revitalization plans, and cumulative impacts associated with the Pilgrim Pipeline proposed to carry crude oil from Albany to New Jersey refineries.

DEC said it will also require a new permit application from a smaller fuel handler at the port, Buckeye Partners.

Oil Prices Rise with Gasoline, Diesel

Markets
| Commodities

WSJ

Energy Oil drilling untitled

By
Timothy Puko and

Nicole Friedman

Gasoline made some of its biggest daily gains of the summer as pipeline and refinery outages had traders surging into fuels, eventually pulling crude prices up, too.

Light, sweet crude for October delivery settled up 33 cents, or 0.8%, to $43.91 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, gained 74 cents, or 1.6%, to $46.59 a barrel.

Oil has benefited from much larger gains in refined products, a trader, broker and analyst said. Gasoline futures settled up 6.87 cents, or 5%, at $1.4302 a gallon. It is only the third time since mid-May that gasoline futures gained more than 5% in one day. Diesel futures gained 3.45 cents, or 2.5%, to $1.4162 a gallon.
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Colonial Pipeline Co. had partially closed the major artery shipping gasoline to eastern states from Texas and said Thursday it doesn’t expect to fully restart that pipeline until next week. Colonial Pipeline is estimated to deliver about 40% of the gasoline consumed on the East Coast, and it is especially important to markets in southeastern states.

While the company said the leak that caused the closing is no threat to public safety, it can cause a temporary drawdown in gasoline stocks and a backlog of crude waiting to be refined. Traders were also wary of a slowdown at the BP Whiting refinery, which can have a similar impact, a broker and analyst said.

They were buying the spread between the products and crude, betting gasoline and diesel prices will increase relative to oil, said Donald Morton, senior vice president at Herbert J. Sims Co., who runs an energy-trading desk. While that at times likely pushed oil into negative territory, it also boosted product futures so much that eventually oil followed, though its gains are just a fraction of gasoline’s and diesel’s, said Scott Shelton, broker at ICAP PLC.

“This is all a very extreme short-term situation,” Mr. Morton said, predicting that there is enough supply in storage facilities to fall again that it will ease prices as soon as the pipeline reopens.

Many in the oil markets had expected crude to rebound Thursday. It fell Wednesday after federal data showed stockpiles of gasoline and distillates, including heating oil and diesel fuel, rising, pushing total supplies of crude oil and refined products to 1.4 billion barrels, back near a record high. But while that seemed bearish to some, others noted crude stocks fell for a second-straight week.

That prior week had also been a fall of 14.5 million barrels, the second biggest weekly drop since 1982, according to the U.S. Energy Information Administration. Many attributed that to stormy weather keeping export cargoes away, but a second week of declines suggests that may not be the case, or at least that a delayed wave isn’t coming into storage.

“It’s a pretty massive draw” from storage over two weeks combined,” Peter Donovan, broker for Liquidity Energy in New York, said. “I’m surprised the market hasn’t bounced back more.”

The impact may still come later, said Mark Waggoner, president of brokerage Excel Futures. It may have taken longer than just last week for diverted ships to get back into Gulf Coast ports, and they may be doing that this week, he said, predicting $39-a-barrel oil by the end of next week.

“We’re going to be offloading these ships as fast as possible,” Mr. Waggoner said. “So I believe we’re going to see a massive glut right as all these refinery operations cut back.”

Nigeria and Libya are also now in a position to ramp up oil exports, another headwind for oil prices. Royal Dutch Shell PLC and Exxon Mobil Corp. have both lifted force majeures on Nigerian exports after militants had caused the shut-in of supply.

Libya is also planning to resume exports from its Ras Lanuf port and a tanker is now due to be loaded with 600,000 barrels of crude.

“This will soon add up and the market is reacting accordingly,” Olivier Jakob of Switzerland’s Petromatrix said when crude futures were lower Thursday morning.