MARKET WATCH: Oil futures prices rise ahead of OPEC meeting
Oil prices rose ahead of an ordinary meeting of the Organization of Petroleum Exporting Countries to discuss the oil market, slated for Dec. 4. Top officials from several OPEC member states commented on signs of oversupply in the US market, according to analysts at Raymond James & Associates Inc.
“A signal that a production cut is imminent?” asked Raymond James analyst Pavel Molchanov in a recent energy daily update. “Not necessarily: we learned long ago not to take OPEC’s rhetoric at face value,” he said.
“Against the backdrop of growing North American production and an uncertain supply outlook in two of its own member states, OPEC’s meeting [Dec. 4] will be arguably its most important of the year. Market expectations seem to be that the group will hold the ‘formal’ production quotas steady at 30 million b/d, as elevated volumes from Saudi Arabia offset disruptions in Libya and Iran,” Molchanov noted.
“Above and beyond the near-term quotas—which long ago lost their practical significance—the market will scrutinize any commentary surrounding longer-term strategy. For example, how will OPEC (read: Saudi) respond to the fact that North America is set to add more oil supply in 2014 than the entire world will add in demand?” Molchanov said, adding, “Another question mark is OPEC member Iran.”
Energy prices
The New York Mercantile Exchange January crude contract increased $1.10 on Dec. 2, closing at $93.82/bbl. The February contract was up $1.09 to settle at $94.10/bbl.
Heating oil for January delivery added 1.93¢, settling at a rounded $3.05/gal on NYMEX. Reformulated gasoline stock for oxygenate blending for January delivery gained 1.56¢ to a rounded $2.68/gal.
The January natural gas contract on NYMEX was up 3.4¢ to settle at a rounded $3.99/MMbtu. On the US spot market, the gas price at Henry Hub, La., closed at a rounded $3.83/MMbtu, a 4.7¢ jump.
In London, the January ICE contract for Brent crude oil increased $1.76, settling at $111.45/bbl. The ICE gas oil contract for December edged down 25¢ to $942.75/tonne.
The Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes closed at $106.74/bbl on Dec. 2, a 33¢ decline from Nov. 29.