MARKET WATCH: NYMEX crude oil for March settles below $53/bbl

Feb. 14, 2017
Light, sweet crude oil prices for March dropped by nearly a $1 to settle under $53/bbl on the New York market Feb. 13 while Brent crude oil prices dropped slightly more than $1 to settle at under $56/bbl on the London market.

Light, sweet crude oil prices for March dropped by nearly a $1 to settle under $53/bbl on the New York market Feb. 13 while Brent crude oil prices dropped slightly more than $1 to settle at under $56/bbl on the London market.

The Organization of Petroleum Exporting Countries released its January production statistics. OPEC and some non-OPEC producers agreed to cut their cumulative production by 1.8 million b/d. Those cuts started in January.

OPEC on Feb. 13 said cartel production fell by 890,000 b/d in January compared with December. Secondary sources estimated OPEC production in January averaged 32.139 million b/d compared with 33.029 million b/d in December (OGJ Online, Feb. 13, 2017).

Crude oil output decreased the most from Saudi Arabia, Iraq, and the UAE while production from Nigeria, Libya and Iran increased, OPEC’s Monthly Oil Report said.

Traders cited concerns about rising production from countries not participating in the agreement, such as US producers. Traders said noted rising output from Libya and Nigeria could dilute the effectiveness of the production cuts. Libya and Nigeria, OPEC members, were exempted from cuts.

“Including Nigerian and Libyan output, BNP Paribas put OPEC’s compliance rate at 77%,” the Wall Street Journal reported, adding, “If Nigerian output keeps growing, that could fall to 63%.”

Goldman Sachs estimates total compliance by OPEC and 11 non-OPEC countries, which agreed to jointly cut output in December, at around 85%.

Helima Croft, chief commodities strategist at Canadian bank RBC Capital Markets, said, “The panic is that [the OPEC cuts] are giving a lifeline to shale production.”

Energy prices

The NYMEX crude oil contract for March delivery dropped 93¢ on Feb. 13 to $52.93/bbl. The April contract was up down 90¢ to $53.43/bbl.

US natural gas futures for March delivery fell 9¢ to a rounded $2.94/MMbtu. The spot gas price at the Henry Hub in Cushing, Okla., declined 2¢ to $2.91/MMbtu.

Heating oil for March declined nearly 4¢ to a rounded $1.63/gal. Reformulated gasoline stock for oxygenate blending for March fell 4.5¢ to a rounded $1.54/gal.

The Brent crude contract for April on London’s ICE was down $1.11 to $55.59/bbl. The Brent May contract was down $1.10 to $55.96/bbl. Gas oil for March closed at $491/tonne, down $12.50.

The average price for OPEC’s basket of benchmark crudes on Feb. 13 was $53.47/bbl, up 24¢.

Contact Paula Dittrick at [email protected].