MARKET WATCH: Crude oil prices likely to remain rangebound ahead of yearend
Oil benchmark prices rose Oct. 24, with light, sweet crude contracts for both December and January settling above $56/bbl on the New York market while the Brent crude contracts for the two months settled above $61/bbl.
Prices settled just above the $55/bbl (WTI) and $60/bbl (Brent) prices at which crude oil “remains stuck,” said Ole Hansen, Saxo Bank head of commodity strategy.
“While the short-term outlook has improved, the 2020 outlook remains challenging with the International Energy Agency looking for non-OPEC supply to exceed demand, thereby putting pressure on the OPEC+ group to cut even deeper,” Hansen said in an Oct. 25 note.
As for the short-term, he said, “the market has found support from a surprise drop in US crude stocks and expectations for a robust refinery activity to meet increased shipping demand for low sulphur fuel before IMO20 regulations begins next year. Current demand for crude oil and subsequent softening into 2020 can be seen in Brent crude oil with the June-2020 futures contract trading at a discount of $2.4/bbl to December-2019, the current front month.”
Addressing this price suppressing gap between supply and demand in 2020 “is likely to be a major market focus ahead of the OPEC+ group meeting in Vienna on December 6,” he said. “At a time of slowing global growth and with that demand for oil, the group will find itself in a position of having to cut deeper or let the price drop further in order to force an accelerated slowdown in US production growth.”
Energy prices
The light, sweet crude contract for December on the New York Mercantile Exchange rose 26¢ to $56.23/bbl on Oct. 24. The January contract increased 28¢ to settle at $56.27/bbl.
The NYMEX natural gas price for November rose 3¢ to a rounded $2.32/MMbtu. The December contract gained nearly 4¢ to a rounded $2.47/MMbtu.
Ultralow-sulfur diesel for November gained 2¢ to a rounded $1.99/gal. The NYMEX reformulated gasoline blendstock for November rose 1¢ to $1.66/gal.
Brent crude oil for December increased 50¢ to $61.67/bbl on London’s International Commodity Exchange. The January contract rose 52¢ to $61.39/bbl. The gas oil contract for November was $599.00/tonne on Oct. 24, up $8.25.
The Organization of Petroleum Exporting Countries’ basket of crudes for Oct. 24 was $61.63/bbl, up $1.21.
Mikaila Adams | Managing Editor - News
Mikaila Adams has 20 years of experience as an editor, most of which has been centered on the oil and gas industry. She enjoyed 12 years focused on the business/finance side of the industry as an editor for Oil & Gas Journal's sister publication, Oil & Gas Financial Journal (OGFJ). After OGFJ ceased publication in 2017, she joined Oil & Gas Journal and was named Managing Editor - News in 2019. She holds a degree from Texas Tech University.
