10-6-17 7:33 AM EDT | Email Article

By Christopher Alessi

Landmark meeting between Saudi King Salman and Russia's Putin 'breathed new life into oil bulls,' says analyst

Oil prices were mixed Friday as investors waited to see the potential impact of Tropical Storm Nate on U.S. Gulf Coast oil infrastructure.

On the New York Mercantile Exchange, November West Texas Intermediate crude fell 50 cents, or 1%, to $50.65 a barrel. It had crossed into positive territory earlier. The contract ended up slightly Thursday following three session declines in a row.

December Brent crude the global oil benchmark, fell 31 cents, or 0.5%, to end at $56.69 a barrel on London's ICE Futures exchange.

"As we come into the weekend, the market is focusing on the implications of Tropical Storm Nate (http://www.marketwatch.com/story/tropical-storm-nate-headed-for-gulf-coast-leaves-22-dead-in-central-america-2017-10-06) and how big any disruptions will be" on crude production and refining capacity, said Richard Mallinson, an analyst at consultancy Energy Aspects.

As with Hurricane Harvey in August, the "tendency is for the focus to be more on refinery shutdowns, which is probably more positive for product prices and probably a little bearish for crude prices," Mr. Mallinson said.

The storm, which formed in Central America, is forecast to strengthen into a hurricane and potentially threaten the Gulf this weekend, according to the National Hurricane Center.

Meanwhile, oil prices posted gains Thursday for the first time in three days on the back of a meeting between Saudi King Salman and Russian President Vladimir Putin in Moscow.

Read:What Putin and Saudi king's buddy act means for the oil market (http://www.marketwatch.com/story/what-putin-and-saudi-kings-buddy-act-means-for-the-oil-market-2017-10-05)

The two leaders discussed extending Russia's participation in a coalition led by the Organization of the Petroleum Exporting Countries that has withheld almost 2% of global oil supply from the market in 2017, though no new agreement was struck.

"The landmark meeting in Moscow breathed new life into oil bulls" and "buoyed expectations that the two protagonists of a supply pact to curb production will push ahead with an extension through the end of 2018," said Stephen Brennock, an analyst at brokerage PVM Oil Associates Ltd.

The original deal, struck nearly a year ago between OPEC and 10 other non-OPEC countries, was to cut production by 1.8 million barrels a day for six months. The agreement was extended in May of this year to continue through the first quarter of 2018.

At the same time, there are "a couple of potentially game-changing developments on the horizon for the coming days in geopolitics," according to analysts at consultancy JBC Energy.

Oil investors are closely watching the fallout over an independence referendum in Iraq's semi-autonomous Kurdistan region that could result in the blocking of roughly 500,000 barrels a day in crude sales.

The market is also waiting on President Donald Trump's expected decision next week on whether or not to certify Iran's compliance with the international nuclear deal. Iran is an OPEC member and key Middle Eastern oil producer.

Investors and analysts will be looking ahead next week to monthly market reports from the International Energy Agency and OPEC.

On Nymex, November gasoline blendstock tacked less than a cent to $1.6113 a gallon and November heating oil fell 1 cent, or 0.5%, to $1.771 a gallon.

November natural gas fell 1 cent, or 0.4%, to $2.911 per million British thermal units.

Prices fell Thursday even as the EIA said domestic supplies of natural gas rose by 42 billion cubic feet (http://www.marketwatch.com/story/eia-reports-a-weekly-rise-of-42-billion-cubic-feet-for-us-natural-gas-supply-2017-10-05) for the week ended Sept. 29. That was below the average forecast for a climb of 47 billion cubic feet by analysts surveyed by S&P Global Platts.

-Christopher Alessi; 415-439-6400; AskNewswires@dowjones.com

 

(END) Dow Jones Newswires

10-06-17 0733ET

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