Light, sweet crude oil dropped modestly on the New York market Nov. 9 with the front-month closing at its lowest since February. The December contract settled under $60.20/bbl, and analysts attributed recent price drops to ample oil supply expectations.
US oil future prices have dropped for 10 trading sessions, which the Wall Street Journal called the longest losing streak since July 1984.
On Nov. 11, representatives of the Organization of Petroleum Exporting Countries met with some non-OPEC producers in Abu Dhabi.
The Joint Ministerial Monitoring Committee (JMMC) issued a statement saying OPEC and non-OPEC producers participating in a production-cut agreement, the Declaration of Cooperation (DOC), achieved 104% conformity during October.
The committee reviewed current oil supply and demand fundamentals, noting it anticipates oil supply growth could outpace world oil demand during 2019. The JMMC cited dampening world economic growth and geopolitical uncertainties.
One analyst doubts Saudi Arabia could make up for all lost production from Iran, Venezuela, and Libya as other oil market participants have suggested.
“While short-term factors have weighed on sentiment, we don’t think Saudi [oil production] can offset those countries,” said Harry Tchilinguirian, BNP Paribas analyst.
Analysts also cited recent US waivers to several countries as another factor changing the oil supply outlook. US President Donald Trump fully imposed unilateral oil sanctions early this month against Iran. The administration pressured other countries to stop buying Iranian crude, but it relented its expectation for certain US trading partners, including China.
Oil prices also fell on a higher US rig count, which traders monitor as a sign of future oil production. Baker Hughes reported its US drilling rig count was up 14 units to 1,081 rigs working for the week ended Nov. 9 compared with the previous week (OGJ Online, Nov. 9, 2018). The latest tally was 174 units higher than the 907 rigs working at that same period a year ago.
Energy prices
The December light, sweet crude contract on the New York Mercantile Exchange dropped 48¢ on Nov. 9 to $60.19/bbl. The January contract fell 50¢ to settle at $60.36/bbl.
The NYMEX natural gas price for December rose nearly 18¢ to a rounded $3.72/MMbtu.
Ultralow-sulfur diesel for December increased less than 1¢ to remain at $2.17/gal. The NYMEX reformulated gasoline blendstock for December dropped 2¢ to $1.62/gal.
Brent crude oil for January dropped 47¢ to $70.18/bbl on London’s International Commodity Exchange. The February contract declined 51¢ to $70.39/bbl. The gas oil contract for December was $669.75/tonne.
OPEC’s basket of crudes for Nov. 9 averaged $68.89/bbl, down $1.79.
Contact Paula Dittrick at [email protected].
