HOUSTON, Nov. 21 -- Crude prices continued to slip Nov. 20 amid skepticism over the Organization of Petroleum Exporting Countries' agreement to cut production by 1.2 million b/d this month.
But losses were limited, analysts said, by reports that ExxonMobil Corp. had taken down a boiler in a processing unit at its 557,000 b/d Baytown, Tex., refinery.
Crude prices were reported higher in early trading Nov. 21 because of shipping delays at Alaska's main export terminal. "Inclement weather has halted crude loadings at the Port of Valdez, reducing the capacity of the 800,000 b/d Trans-Alaska Pipeline to 25%," said analysts in the Houston office of Raymond James & Associates Inc. "As weather forecasts continue to drive short-term oil price swings and OPEC rhetoric becomes routine, we would expect to see continued range trading. Forecast of a fuel inventory drawdown is also providing support to oil prices," they said.
Earlier, OPEC's Acting Sec. Gen. Mohammed Barkindo said skepticism about that group's commitment to production cuts is premature and unfounded. Separately, a senior Iranian oil official reiterated that Iran has reduced its output by 176,000 b/d but that it will take at least a month for it to be evident in markets.
Meanwhile, Oil Movements, which tracks tanker operations, said OPEC exports are expected to increase to 24.84 million b/d in the 4 weeks to Dec. 2, up by 40,000 b/d from the revised exports in the 4 weeks before Nov. 25 and a 210,000 b/d increase from the 4 weeks prior to Nov. 4.
Indonesia's Minister of Energy and Mineral Resources Purnomo Yusgiantoro said there is no plan yet for further reduction of OPEC production, and on Nov. 19 Iraq reactivated the pipeline transporting crude from its Kirkuk fields to the export terminal at Ceyhan, Turkey. Operation of that pipelinea frequent target for sabotagehad been suspended for a month.
The new front-month January contract for benchmark US sweet, light crudes slipped by 17¢ to $58.81/bbl Nov. 20 on the New York Mercantile Exchange. The February contract lost 26¢ to $60.28/bbl. On the US spot market, however, West Texas Intermediate at Cushing, Okla., plunged by $3.86 to $56.46/bbl. The gap between the spot market price and the NYMEX price often widens when a new contract takes the front-month position.
Unleaded gasoline for December delivery gained 1.12¢ to $1.56/gal on NYMEX. Heating oil for the same month inched up by 0.19¢ but closed virtually unchanged at $1.67/gal.
The December natural gas contract traded at $7.91-8.19/MMbtu before closing at $8.02/MMbtu, down by 16¢ for the day, on forecasts of mild weather from the Rockies to the Atlantic through the first week of December. However, gas prices have risen 17% in the past month, said analysts at Enerfax Daily.
Another escalation of gas prices "is only a cold weather forecast away," Raymond James analysts said.
In London, the January IPE contract for North Sea Brent crude dipped by 1¢ to $59.89/bbl. The December gas oil contact regained $3.75 to $523.50/tonne
The average price for OPEC's basket of 11 benchmark crudes increased 13¢ to $54.03/bbl on Nov. 20.
Contact Sam Fletcher at email@example.com.