Benchmark crude oil prices ended a volatile holiday trading period by settling modestly higher on the final trading day of 2018. Previously, both equities and oil prices have whipsawed with steep losses on some days and gains on other days.
“It’s a similar trend that we have seen—when equities are up then also oil has been opening up,” said Giovanni Staunovo, UBS Wealth Management analyst. He expects 2019 crude markets will be driven more by fundamentals after a growing number of investors resume buying oil.
Crude oil futures trading was choppy with low volumes on New Year’s Eve, traders said. Light, sweet oil for February delivery closed higher, up 8¢ at $46.41/bbl, down sharply compared with front-month highs of around $75/bbl in early October. Most commodity markets were closed Jan. 1 for New Year’s Day.
US light, sweet crude oil fell 10.8% during December, about 38% over the quarter and 24.8% for 2018, Dow Jones Market Data reported.
In London, Brent crude for March delivery gained 59¢ to settle at $53.80/bbl. But Brent futures fell more than 8% during December, about 35% for the quarter and 19.5% for the year, Dow Jones Market Data reported.
Light, sweet crude prices also gained support Dec. 31 from a weakening US dollar. Oil is traded in US dollars on most exchanges worldwide, so a weaker dollar makes oil less expensive for buyers with other currencies.
Meanwhile, the Organization of Petroleum Exporting Countries and some non-OPEC producers, including Russia, agreed in early December to reduce production by 1.2 million b/d total starting Jan. 1.
The agreement is intended to prevent oil markets being oversupplied in 2019 in efforts to stabilize crude prices.
“The key swing producers within OPEC+ do have meaningful spare capacity and are able to use it if they deem it necessary,” JBC Energy analysts wrote in a Dec. 31 note. “That said, it is nonetheless a difficult tool to use correctly in a world where forecasters tend to routinely underestimate US production by several hundred thousand barrels per day.”
The US Energy Information Administration is scheduled to release its Weekly Petroleum Status Report on Jan. 5, a few days later than usual because federal offices were closed for New Year’s Eve and New Year’s Day.
Energy prices
The February light, sweet crude contract on NYMEX gained 8¢ to settle at $45.41/bbl on Dec. 31. NYMEX natural gas futures for January fell 36¢ to close at $2.94/MMbtu on Dec. 31.
Ultralow-sulfur diesel for January edged up less than 1¢ to remain at a a rounded $1.68/gal. The NYMEX reformulated gasoline blendstock for January edged down less than 1¢ to $1.32/gal.
Brent for March gained 59¢ to $53.80/bbl on London’s International Commodity Exchange. The gas oil contract for January Brent crude oil for was $510.75/tonne on Dec. 31, up $17.50.
The average price for OPEC’s basket of crudes was $51.55/bbl on Dec. 28, down 80¢ from Dec. 27.
Contact Paula Dittrick at [email protected].
