Light, sweet crude oil for the January contract dropped modestly to approach $51/bbl, settling at $51.15/bbl on the New York market Dec. 12 on concerns about the Organization of Petroleum Exporting Countries’ ability to make the production cut that it announced last week.
Bloomberg reported Iran’s Oil Minister Bijan Zanganeh discussed OPEC infighting and political disagreements. Zanganeh’s comments raised doubts about OPEC’s ability to comply with an agreement to cut production by 800,000 b/d starting Jan. 1, 2019.
Some non-OPEC members, including Russia, agreed to cut production by 400,000. The production allies, OPEC and non-OPEC, said on Dec. 7 that they would cut a total of 1.2 million b/d for 6 months and then review their agreement again.
OPEC released its Monthly Oil Market Report Dec. 12 showing secondary sources estimate cartel production averaged 32.97 million b/d for November, down 11,000 b/d from October (OGJ Online, Dec. 12, 2018).
Saudi Arabia’s production climbed by 377,000 b/d from October to November to reach 11.01 million b/d. The Saudi production increase was offset by supply declines from Iran—whose oil exports are under US sanctions—as well as Venezuela, Nigeria, and Iraq.
Separately, the International Energy Agency said OPEC crude production rose by 100,000 b/d in November compared with October. OPEC’s November output was 33.03 million b/d, IEA said.
Meanwhile, US crude oil inventories fell for the week ended Dec. 7. Supplies, excluding the Strategic Petroleum Reserve, decreased by 1.2 million bbl to 442 million bbl, the US Energy Information Administration said (OGJ Online, Dec. 12, 2018).
The weekly Petroleum Status Report showed US oil production dropped 100,000 b/d for the week ended Dec. 7 to 11.6 million b/d. Much of the drop came from lower production across the Lower 48.
Energy prices
The January light, sweet crude contract on the New York Mercantile Exchange fell 50¢ to close at $51.15/bbl.
Natural gas futures for January declined 27¢ to close at a rounded $4.14/MMbtu on Dec. 12.
Ultralow-sulfur diesel for January edged up less than 1¢ to remain at a rounded $1.85/gal. The NYMEX reformulated gasoline blendstock for January decreased 2¢ to a rounded $1.42/gal.
Brent crude oil for February dropped 5¢ to $60.15/bbl on London’s International Commodity Exchange. The gas oil contract for January was $565/tonne, up $5.75.
OPEC’s basket of crudes for Dec. 12 averaged $59.20/bbl, up 63¢ from the previous day.
Contact Paula Dittrick at [email protected].
