Both light, sweet crude oil on the New York market and Brent crude oil in London settled higher Jan. 3, marking the benchmarks’ fourth consecutive session of gains.
The Wall Street Journal reported it was the longest streak of higher settlements since August 2018 when oil prices rose 5 days in a row.
The US Energy Information Administration was expected to release its weekly oil and product inventory report on Jan. 4, which was being released later than normal because of the New Year’s holiday.
A WSJ poll showed analysts surveyed expect oil inventories to have fallen by 2.5 million bbl for the week ended Dec. 28, 2018.
The American Petroleum Institute said its own data for that same week showed an estimated 4.5 million-bbl decrease in crude supplies.
On world markets, Jan. 1 marked the effective date of 1.2 million b/d in production cuts that the Organization of Petroleum Exporting Countries and some non-OPEC producers agreed Dec. 7, 2018.
OPEC’s production dropped in December. A Bloomberg survey of officials, analysts, and ship-tracking data showed Saudi Arabia making cuts early. Production by OPEC members fell 530,000 b/d to 32.6 million b/d in December—the steepest reduction since January 2017. Bloomberg’s survey estimated Saudi production declined 420,000 b/d in December 2018 to 10.65 million b/d, down from 11 million b/d during November.
Ole Hansen of Saxo Bank said, “The uncertain demand outlook is creating a lot of headaches for producers who cannot just rely on the market to stabilize by cutting production. On that the basis we have seen an increased correlation between stock market moves and movements in crude oil.”
As 2018 closed, crude oil prices often moved in the same direction as volatile equity markets.
The production cuts by OPEC and its allies, including Russia, are intended to help strengthen oil prices. Separately, resolution of a US-China trade dispute also could support oil prices. US trade officials are scheduled to have talks with their Chinese counterparts in Beijing over several days starting the week of Jan. 7.
Energy prices
The February light, sweet crude contract on NYMEX gained 55¢ to settle at $47.09/bbl on Jan. 3 while the contract for March delivery settled at $47.40/bbl, up 54¢.
NYMEX natural gas for February nudged down less than 1¢ to close at a rounded $2.95/MMbtu on Jan. 3.
Ultralow-sulfur diesel for February was up 4¢ to $1.74/gal. The NYMEX reformulated gasoline blendstock for February gained 2¢ to a rounded $1.35/gal.
Brent for March gained $1.04 to $55.95/bbl on London’s International Commodity Exchange while the April contract gained 99¢ to settle at $56.14/bbl. The gas oil contract was $512.25/tonne on Jan. 3, down $4.75.
The average price for OPEC’s basket of crudes was $52.95/bbl on Jan. 3, up 78¢.
Contact Paula Dittrick at [email protected].
