MARKET WATCH: Crude oil benchmarks continue gaining on production cuts

Jan. 11, 2019
The light, sweet crude oil price for February rose for a ninth consecutive day on Jan 10, settling above $52/bbl. That was a 4-week high on the New York futures market and the longest gain in 9 years, which analysts attributed to lessening concerns about oil oversupply amid weaker demand.

The light, sweet crude oil price for February rose for a ninth consecutive day on Jan 10, settling above $52/bbl. That was a 4-week high on the New York futures market and the longest gain in 9 years, which analysts attributed to lessening concerns about oil oversupply amid weaker demand.

Brent crude also rose to settle above $61/bbl on London’s Intercontinental Exchange, which the Wall Street Journal reported was that benchmark’s longest gain since September 2007.

“We believe that the current price level better reflects the fundamental data than the price level shortly before Christmas,” Commerzbank analysts wrote in a Jan. 10 research note. “After all, unless oil demand weakens noticeably, the oversupply on the oil market will gradually disappear.”

Oil prices also received support from production cuts by the Organization of Petroleum Exporting Countries and some other producers, including Russia.

Ole Hansen of SaxoBank said crude oil prices rose with equity markets on increased hopes of a US-China trade resolution, a softer US dollar, and production cuts. But he also said worries about the world economy “still nag.”

Hansen noted a US-China trade deal “is likely to slow but unlikely to reverse the deterioration seen recently in forward-looking economic data from the US to Europe and China. On that basis, the upside at this stage may be limited to the upper area of the mentioned consolidation area for Brent at $64/bbl and West Texas Intermediate at $55/bbl.”

The US Energy Information Administration reported crude inventories declined by 1.7 million bbl for the week ended Jan 4 compared with the previous week while US crude oil production held unchanged at 11.7 million bbl.

Energy prices

The February light, sweet crude contract on the New York Mercantile Exchange gained 23¢ to settle at $52.59/bbl on Jan. 10 while the contract for March delivery settled at $52.91/bbl, up 22¢.

NYMEX natural gas for February fell 1.5¢ to close at a rounded $2.97/MMbtu on Jan. 10.

Ultralow-sulfur diesel for February was up nearly 2.5¢ to a rounded $1.91/gal. The NYMEX reformulated gasoline blendstock for February nudged up less than 1¢ to remain at a rounded $1.43/gal.

Brent crude for March gained 24¢ to $61.68/bbl on London’s ICE while the April contract gained 21¢ to settle at $61.81/bbl. The gas oil contract held at $561/tonne on Jan. 10, unchanged from the previous day.

The average price for OPEC’s basket of crudes was $59.48/bbl on Jan. 10, up $1.24.

Contact Paula Dittrick at [email protected].