Crude oil benchmarks dropped on markets in New York and London Nov. 12, which analysts attributed in part to comments by US President Donald Trump urging Saudi Arabia and the Organization of Petroleum Exporting Countries against cutting oil production.
“Hopefully, Saudi Arabia and OPEC will not be cutting oil production,” Trump said. “Oil prices should be much lower based on supply.” His comments came as many analysts and traders expressed concerns about ample oil supplies.
US oil sanctions against Iran became fully effective in early November after Trump in May announced a US exit from an international agreement that had lifted sanctions by a group of countries against Iran in exchange for that country’s cooperation regarding its nuclear program.
Separately, OPEC production rose 127,000 b/d in October to average 32.9 million b/d, the cartel said Nov. 13 in its Monthly Oil Market Report. Gains mostly came from the UAE and Saudi Arabia. Iran’s production continued to fall, falling 156,000 b/d in October to 3.296 million b/d, the report said.
The cartel lowered its 2019 oil demand forecast, which could be an indicator that OPEC might cut production to balance oil supply and demand.
OPEC forecast that world oil demand will increase by 1.29 million b/d, about 70,000 b/d lower than last month’s forecast and sharply down from the 1.45 million b/d that OPEC forecast in July for 2019.
“The recent downward revision to the global economic growth forecast and associated uncertainties confirms the emerging pressure on oil demand observed in recent months,” OPEC said.
Energy prices
The December light, sweet crude contract on the New York Mercantile Exchange dropped 26¢ on Nov. 12 to $59.93/bbl. The January contract fell 28¢ to settle at $60.08/bbl.
The NYMEX natural gas price for December rose nearly 7¢ to a rounded $3.79/MMbtu.
Ultralow-sulfur diesel for December decreased less than 2¢ to remain at $2.16/gal. The NYMEX reformulated gasoline blendstock for December gained 1.5¢ to a rounded $1.64/gal.
Brent crude oil for January dropped 6¢ to $70.12/bbl on London’s International Commodity Exchange. The February contract held steady from the previous day at $70.39/bbl. The gas oil contract for December was $666.50/tonne, down $3.25.
OPEC’s basket of crudes for Nov. 12 averaged $69.82/bbl, up 93¢.
Contact Paula Dittrick at [email protected].
