MARKET WATCH: Oil prices rise $1/bbl after OPEC, non-OPEC meeting
Crude oil benchmark prices rose on markets in New York and London by more than $1/bbl Dec. 12 following a Dec. 10 meeting of the Organization of Petroleum Exporting Countries and representatives of some non-OPEC countries.
OPEC has vowed to cut cartel production by 1.2 million b/d starting in January. Non-OPEC countries agreed to cut by 558,000 b/d of which Russia will cut 300,000 b/d (OGJ Online, Dec. 12, 2016).
Goldman Sachs Group issued a report saying that the US light, sweet crude oil price might rise above $60/bbl if OPEC and non-OPEC producers cut production as promised. But the bank also noted that prices could drop to $55/bbl with a rebound in US shale production.
The bank maintained its forecast of $55/bbl West Texas Intermediate oil prices for the first half of 2017.
Saudi Energy Minister Khalid al-Falih told reporters in Vienna on Dec. 10 that he did not expect a big supply response from US shale producers in 2017.
Olivier Jakob, Petromatrix analyst, said Saudi Arabia wanted to get Russia involved in cooperative agreements among oil-producing countries to help oil prices recover from a 2-year downturn.
“This has been a major geopolitical development, and I think it is historic,” Jakob said. “Russia has been very linked to Iran and with this latest development it is also reaching out a little bit to the wider gulf area.”
Energy prices
The January crude oil contract on the New York Mercantile Exchange gained $1.33 on Dec. 12 to close at $52.83/bbl. The February contract rose $1.31 to $53.75/bbl.
The natural gas contract for January was down a rounded 24¢ to a rounded $3.51/MMbtu. The Henry Hub spot market for gas closed at $3.57/MMbtu, down 18¢.
Heating oil for January rose 3¢ to a rounded $1.67/gal. Reformulated gasoline stock for oxygenate blending for January increased 3.6¢ to a rounded $1.54/gal.
The Brent crude contract for February on London’s ICE was up $1.36 to $55.69/bbl. The March contract increased $1.31 to $56.37/bbl. Gas oil for January closed Dec. 12 at $491/tonne, up $13.50.
The average price for OPEC’s basket of benchmark crudes for Dec. 12 was $53.24/bbl, up $2.29.
Contact Paula Dittrick at [email protected].
About the Author
Paula Dittrick
Senior Staff Writer
Paula Dittrick has covered oil and gas from Houston for more than 20 years. Starting in May 2007, she developed a health, safety, and environment beat for Oil & Gas Journal. Dittrick is familiar with the industry’s financial aspects. She also monitors issues associated with carbon sequestration and renewable energy.
Dittrick joined OGJ in February 2001. Previously, she worked for Dow Jones and United Press International. She began writing about oil and gas as UPI’s West Texas bureau chief during the 1980s. She earned a Bachelor’s of Science degree in journalism from the University of Nebraska in 1974.