MARKET WATCH: NYMEX prices drop, settling closer to $55/bbl

Nov. 17, 2017
Light, sweet crude oil futures dropped to approach $55/bbl on the New York market Nov. 16 during a week in which the US benchmark declined nearly daily, but crude prices gained in early Nov. 17 trading.

Light, sweet crude oil futures dropped to approach $55/bbl on the New York market Nov. 16 during a week in which the US benchmark declined nearly daily, but crude prices gained in early Nov. 17 trading.

Analysts said price support came after Saudi Arabia’s Energy and Industry Minister Khalid al-Falih spoke about production-cut targets with reporters on the sidelines of a United Nations climate conference.

Al-Falih said production-cut targets remain necessary to continue the market rebalancing of oil supply-demand already under way.

The minister told Reuters he supports an extension of production-cut targets. The Organization of Petroleum Exporting Countries is expected to discuss this when it meets Nov. 30 in Vienna.

OPEC members and some non-OPEC members, including Russia, are participating in existing production-cut targets currently set to expire in March 2018.

Russia officials have suggested a willingness to extend the production-cut targets. Russia representatives plan to attend the OPEC meeting.

Commerzbank analysts issued a research note Nov. 17 saying they believe that any action less than “an extension to the end of 2018 is likely to send the oil price into an immediate tailspin.”

Rising US oil production could influence oil prices more than OPEC, Commerzbank said. Weekly US government statistic showed US crude oil production was up 25,000 b/d to 9.645 million b/d for the week ended Nov. 10 (OGJ Online, Nov. 16, 2017).

“In our view, the key factor in the supply-demand equation is the US shale sector—something OPEC is keen to play down through its constant comments on the agreement to cut production,” Commerzbank analysts said.

Hans van Cleef, senior energy economist for ABN AMRO, issued a Nov. 16 research note stating: “It is now up to the swing producers to keep oil supply in balance with the rise in demand.”

Van Cleef said this is possible if US shale producers accept a moderate growth path for oil production.

“In other words, the market share between OPEC and non-OPEC should remain intact,” van Cleef said. During 2018, he expects “a continuation of the oil price rally towards $75/bbl for Brent with US light, sweet oil prices climbing to reach $70/bbl.

Energy prices

The December light, sweet crude contract on the New York Mercantile Exchange dropped 19¢ on Nov. 16 to $55.14/bbl. The January 2018 contract also declined 17¢ to $55.35/bbl.

The NYMEX natural gas price for December fell nearly 3¢ to $3.05/MMbtu. The Henry Hub cash gas price was a rounded $3.06/MMbtu, down 6¢.

Heating oil for December edged down less than 1¢ to $1.90/gal. The NYMEX reformulated gasoline blendstock for December dropped a rounded 2.5¢ to $1.71/gal.

The Brent crude contract for January 2018 on London’s ICE decreased 51¢ to $61.36/bbl. The February 2018 contract fell 47¢ to $61.29/bbl. The gas oil contract for December was up 75¢ to $556.75/tonne.

OPEC’s basket of crudes on Nov. 16 was $59.98/bbl, up 19¢.

Contact Paula Dittrick at [email protected].