Crude oil benchmarks on markets in New York and London jumped to close more than $2/bbl higher Dec. 3 on news reports that Russia and Saudi Arabia are working toward an agreement to cut crude production in efforts to support oil prices.
Meanwhile, the Alberta government announced a curtailment in oil production beginning Jan. 1 in what it called a response “to the historically high oil price differential that is costing the [Canadian] economy more than $80 million/day.”
Every operator in Alberta will be required to trim output of more than 10,000 b/d by 8.7% from its highest 6 months of production over the past 12 months. The Alberta Energy Regulator will regulate the curtailment (OGJ Online, Dec. 3, 2018).
The Organization of Petroleum Exporting Countries and some non-OPEC producers, led by Russia, will discuss production levels during a Dec. 6 OPEC meeting in Vienna.
“The challenge is to bring on board Iran and Venezuela where production is already low,” said Giovanni Staunovo, UBS Wealth Management analyst.
Oil prices fell by more than 30% from 4-year highs hit in early October. Analysts said the lower price stemmed from rising US, Saudi, and Russian oil production along with unexpected waivers on US sanctions allowing some buyers to import Iranian oil.
Light, sweet crude oil traded briefly below $50/bbl on Nov. 29 but settled above $51/bbl that day. It was the first time US oil futures dropped below $50/bbl in nearly 14 months.
Michael Cohen, analyst with Barclays Research, said, “Oil’s still unbloated inventory situation and continuation of Iran sanctions are likely to raise oil prices next year, but we expect natural gas prices to fall.”
US government offices will be closed Dec. 5 for former President George H.W. Bush’s funeral.
Energy prices
The January light, sweet crude contract on the New York Mercantile Exchange gained $2.02 to $52.95/bbl. The February contract increased $2.05 to $53.14/bbl.
Natural gas futures for January fell 27¢ to close at a rounded $4.34/MMbtu on Dec. 3.
Ultralow-sulfur diesel for January rose 5¢ to $1.88/gal. The NYMEX reformulated gasoline blendstock for January increased 3¢ to a rounded $1.43/gal.
Brent crude oil for February gained $2.65 to $61.69/bbl on London’s International Commodity Exchange. The March contract increased $2.59 to $61.82/bbl. The gas oil contract for December was $577.75/tonne, up $27.
OPEC’s basket of crudes for Dec. 3 averaged $60.64/bbl, up $2.31.
Contact Paula Dittrick at [email protected].
