MARKET WATCH: Oil futures price climb to nearly $48/bbl

Oil futures prices rose again Dec. 11 on NYMEX, gaining momentum upon strengthening indications that OPEC members support lower production quotas.

Paula Dittrick
Senior Staff Writer

HOUSTON, Dec. 12 -- Oil futures prices rose again Dec. 11 on the New York Mercantile Exchange, gaining momentum upon strengthening indications that members of the Organization of Petroleum Exporting Countries support lower production quotas.

Energy commodities also became more attractive to investors because the US dollar lost value against other currencies. The euro rose to $1.3227 Dec. 11 compared with $1.2988 late Dec. 10 in New York.

The 10% jump in oil prices followed the Dec. 11 release of a monthly oil report from the International Energy Agency in which the agency forecast global oil demand for 2008 will fall for the first time since 1983 (OGJ Online, Dec. 11, 2008).

OPEC is scheduled to meet Dec. 17 in Algeria. In October, the cartel cut production quotas to help steady oil prices, yet crude prices continued to drop, settling below $40/bbl on NYMEX on Dec. 5. Crude oil prices had reached $147/bbl in July on NYMEX.

On Dec. 11, Ali al-Naimi, Saudi Arabia's oil minister, confirmed the kingdom had cut production to 8.49 million b/d in November, close to its quota. He spoke with reporters during an environment conference in Poland.

Analysts cut oil price forecasts
Friedman, Billings, Ramsey & Co. Inc. revised its October price outlook to account for lower global gross domestic production projects for 2009-10.

"Our price projections now range between $55-70/bbl for calendar year 2009, $60-77.50/bbl for calendar year 2010, and $62.50-85/bbl for calendar year 2011," FBR said in a research note. "We have elected to continue the intellectually wimpy practice of setting price ranges rather than absolute targets."

FBR cited uncertainty surrounding the depth and duration of the economic slump, the durability of OPEC discipline, and the resilience of transportation fuel demand, particularly US gasoline demand.

Earlier this week, Deutsche Bank revised its oil price forecast for 2009 to $47.50/bbl compared with an earlier forecast of $60/bbl. Its 2010 forecast is $55/bbl, and its 2011 forecast is $80/bbl.

Energy prices
The January contract for benchmark US light, sweet crudes rose $4.46 to $47.98/bbl. The February contract climbed $4.82 to $50.84/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., soared $4.46 to $47.98/bbl.

Heating oil for January delivery rose 10¢ to $1.5066/gal on NYMEX. The January contract for reformulated blend stock for oxygenate blending (RBOB) gained 10.9¢ to $1.0786/gal.

Natural gas for the same month fell 8.8¢ to $5.598/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., climbed 13¢ to $5.83/MMbtu.

In London, the January IPE contract for North Sea Brent crude escalated $4.99 to $47.35/bbl. The December gas oil contract held steady at $429.25/tonne.

The average price for OPEC's basket of 13 reference crudes climbed by $2.18 on Dec. 11 to close at $40.12/bbl.

Contact Paula Dittrick at paulad@ogjonline.com.

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