Light, sweet crude oil for January delivery fell modestly on the New York market to settle below $53/bbl while Brent for February and March fell to settle below $62/bbl Dec. 5 pending a meeting of the Organization of Petroleum Exporting Countries in Vienna.
The cartel is under pressure after oil prices fell about 30% since early October. Analysts said oil prices tumbled on concerns about rising world oil supplies coupled with concerns about world economic growth—and likely slowing oil demand.
Oil prices dropped more during Dec. 6 trading after Saudi Arabia’s Energy Minister Khalid al-Falih said the cartel had yet to reach agreement regarding whether to reduce production. He made the comment before the cartel convened.
Other major producers, including Russia, also were in Vienna for talks with OPEC on Dec. 7 about production levels. Ten non-OPEC members previously agreed to production cuts along with OPEC.
“We want to listen to member country views but most importantly we have to get non-OPEC countries on board, al-Falih said.
Bjornar Tonhaugen, Rystad Energy head of oil market research, said OPEC and their non-OPEC allies must cut 2019 supply growth by 1.5 million b/d if they want oil prices back above $70/bbl in 2019.
“We believe a cut announcement that effectively removes anything less than 1 million b/d of 2019 supply would be interpreted negatively by the market,” Tonhaugen said.
Meanwhile on Dec. 5, US President Donald Trump tweeted: “Hopefully OPEC will be keeping oil flows as is, not restricted. The world doesn’t want to see, or need, higher oil prices.”
Meanwhile, Saudi Arabia also is trying to maintain US-Saudi relations. US intelligence agencies concluded Saudi Crown Prince Mohammad bin Salman ordered the killing of dissident Saudi journalist Jamal Khashoggi.
But Trump has dismissed those findings and vows to remain a “steadfast partner” of Saudi Arabia.
The US Energy Information Administration was scheduled to report the weekly inventory on Dec. 6, a day later than usual because federal offices were closed Dec. 5 in observance of former President George H.W. Bush’s funeral.
Energy prices
The January light, sweet crude contract on the New York Mercantile Exchange fell 36¢ to $52.89/bbl. The February contract decreased 34¢ to $53.12/bbl.
Natural gas futures for January gained 1¢ to close at a rounded $4.47/MMbtu on Dec. 5.
Ultralow-sulfur diesel for January fell 1¢ to a rounded $1.89/gal. The NYMEX reformulated gasoline blendstock for January edged up less than 1¢ to remain at a rounded $1.44/gal.
Brent crude oil for February dropped 52¢ to $61.56/bbl on London’s International Commodity Exchange. The March contract decreased 46¢ to $61.76/bbl. The gas oil contract for December was $586.75/tonne, down 50¢.
OPEC’s basket of crudes for Dec. 5 averaged $60.08/bbl, down $1.01.
Contact Paula Dittrick at [email protected].
