The light, sweet crude oil price for January delivery briefly slipped below $50/bbl during Nov. 30 trading before settling at nearly $51/bbl. The contract dropped to a low of $49.65/bbl during the Nov. 30 session but had recovered to climb above $50/bbl again by closing.
Oil prices have fallen in recent weeks on strong production, especially in the US, and concerns that world oil supply will overtake world oil demand growth, which is weakening.
US crude oil futures prices fell 22% in November, the biggest single month percentage loss since October 2008, the Wall Street Journal reported.
On the sidelines of a G20 meeting in Argentina Nov. 30-Dec. 1, Russia said it would join Saudi Arabia in cutting crude production. Russian President Vladimir Putin said he agreed with the Saudis to extend a deal to cut oil production through next year although he did not give specific production numbers.
US and China officials also reportedly reached agreement over their trade dispute during talks at the G20. Oil market participants had been closely watching those trade tensions.
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.
Torbjorn Soltvedt, politics principal for the Middle East and North Africa with Verisk Maplecroft, said the OPEC meeting will be less about internal cartel disagreements and more about how Saudi Arabia manages its shifting relations with US and Russia.
“Given Saudi Arabia’s need to balance a host of conflicting interests, our base-case scenario is a de-factor Saudi-led cut with Russian participation,” Soltvedt said. He expects “a flexible agreement that shies away from specific targets.”
US oil sanctions against Iran became fully effective in early November. US President Donald Trump’s administration granted certain countries waivers, enabling those countries to continue buying Iranian crude oil until May 2019 (OGJ Online, Nov. 29, 2018).
Soltvedt said the sanctions waivers are a key factor supporting an oil production cut.
“The Saudi leadership is very unhappy with the lack of warning from Washington that key importers of Iranian oil would be granted sanctions waivers,” he said.
Separately, the WSJ reported that some investment bankers in November lowered their forecasts for 2019 oil prices amid signs of rising oil supply and dropping oil prices.
Brent crude was expected to average $76.98/bbl next year, down from an earlier forecast of $77.58/bbl, according to 11 investment banks polled by WSJ. The forecast for light, sweet crude futures was $69.98/bbl, which was down from earlier forecasts of $70.81/bbl.
Energy prices
The January light, sweet crude contract on the New York Mercantile Exchange fell 52¢ to $50.93/bbl. The February contract fell 53¢ to $51.09/bbl.
Natural gas futures for January fell 3¢ to close at a rounded $4.61/MMbtu on Nov. 30.
Ultralow-sulfur diesel for December edged up less than 1¢ to remain at a rounded $1.84/gal. The NYMEX reformulated gasoline blendstock for December decreased 1¢ to a rounded $1.44/gal.
Brent crude oil for January dropped 80¢ to $58.71/bbl on London’s International Commodity Exchange. The February contract fell 45¢ to $59.46/bbl. The gas oil contract for December was $550.75/tonne, down $9.
OPEC’s basket of crudes for Nov. 30 averaged $58.33/bbl, up 24¢.
Contact Paula Dittrick at [email protected].
