Oil prices climbed on the New York market Oct. 31 and reached above $55/bbl in early Nov. 1 trading on what analysts called growing optimism that the Organization of Petroleum Exporting Countries will extend its production-cut targets.
Ole Hansen, head of commodity strategy for Saxo Bank, noted Brent crude oil traded above $60/bbl on the London market for 4 days as of Nov. 1 while the US benchmark tested its own 2017 high.
Late last year, OPEC and some non-OPEC producers, including Russia, initially agreed to production-cut targets of about 1.8 million b/d lower than October 2016 levels. Those targets became effective in January and were formally extended earlier this year through March 2018.
OPEC’s next regularly scheduled meeting is Nov. 30 in Vienna. The production-cut targets are intended to support oil prices.
Meanwhile, preliminary indicators suggest US oil supplies ended October with a weekly decline.
The American Petroleum Institute said its preliminary crude oil inventory tally showed US supplies dropped 5.1 million bbl for the week ended Oct. 27. The US Energy Information Administration was scheduled to release its weekly inventory report later on Nov. 1.
Analysts and traders surveyed by the Wall Street Journal expect EIA statistics will show a 1.2-million bbl drop.
Separately, WSJ surveyed 14 investment banks on oil prices. They increased their oil price forecasts in October for the first time in 6 months.
Bankers forecast Brent crude will average $54/bbl in 2018 while the US benchmark will average $51/bbl a barrel in 2018, the WSJ reported. Both benchmark forecasts are up $1 from the WSJ September survey.
“Fundamentals are improving, demand is robust, and OPEC compliance with cuts is high,” Jason Gammel, a Jefferies analyst, told the WSJ. Jefferies was among the banks surveyed.
Energy prices
The December light, sweet crude contract on the New York Mercantile Exchange increased 23¢ to $54.38/bbl on Oct. 30. The January 2018 contract gained 22¢ to $54.59/bbl.
The NYMEX natural gas price for December fell 7¢ to a rounded $2.90/MMbtu. The Henry Hub cash gas price dropped 10¢ to $2.77/MMbtu.
Heating oil for November rose less than 1¢ to remain at a rounded $1.88/gal. The NYMEX reformulated gasoline blendstock for November gained 1.5¢ to a rounded $1.78/gal.
The Brent crude contract for December on London’s ICE gained 47¢ to $61.31/bbl. The January 2018 contract rose 35¢ to $60.94/bbl. The gas oil contract for November gained $3.50 to $551/tonne.
OPEC’s Oct. 31 basket of crudes price was unavailable because OPEC’s Secretariat office was closed Nov. 1.
Contact Paula Dittrick at [email protected].
