Light, sweet crude oil futures declined slightly but still settled above $56/bbl on Nov. 20 on the New York market as oil prices traded fairly flat in anticipation of a Nov. 30 producers’ meeting in Vienna. The Organization of Petroleum Exporting Countries and some non-OPEC producers, including Russia, are expected to decide whether to extend production-cut targets set to expire in March 2018.
Certain producers agreed to production-cut targets in efforts to reduce ample world oil supplies, which would in turn support oil prices. Most analysts expect OPEC will extend the production-cut agreement.
“With many market participants anticipating a full year 2018 extension of the 1.8 million b/d output cut, anything less could easily produce a selloff sequel to the May meeting meltdown,” RBC Capital Markets analysts said Nov. 20.
Investors’ concerns are growing over Russia's willingness to support production-cut target extensions.
Meanwhile, rising US oil production, particularly output from shale plays, is counteracting OPEC’s reduced production.
Commerzbank analysts suggested a “need [for producers elsewhere] to further extend the agreement shows that the strategy is not working.”
Separately, analysts said oil prices received some support from the partial shutdown of TransCanada’s Keystone pipeline following an oil spill last week.
“We have the Thanksgiving holidays and some supply disruptions that offer a bit of support,” said Olivier Jakob, Petromatrix managing director.
Most US markets will be closed Nov. 23 in observance of the US national holiday.
Energy prices
The December light, sweet crude contract on the New York Mercantile Exchange fell 46¢ on Nov. 20 to $56.09/bbl. The January 2018 contract dropped 29¢ to $56.42/bbl.
The NYMEX natural gas price for December decreased 5¢ to a rounded $3.05/MMbtu. The Henry Hub cash gas price held steady at $3.05/MMbtu.
Heating oil for December fell 1¢ to $1.93/gal. The NYMEX reformulated gasoline blendstock for December edged down less than 1¢ to remain at a rounded $1.74/gal.
The Brent crude contract for January 2018 on London’s ICE decreased 50¢ to $62.22/bbl. The February 2018 contract was down 49¢ to $62.06/bbl.
The gas oil contract for December was up 25¢ to $556/tonne.
OPEC’s basket of crudes on Nov. 20 was $60.33/bbl, up 43¢.
Contact Paula Dittrick at [email protected].
