Crude oil prices held fairly steady in Dec. 30, 2016, trading with each benchmark declining only a few cents to close slightly above $53.70/bbl for February delivery on the New York market and slightly above $56.80/bbl for March delivery on the London market.
The Wall Street Journal reported light, sweet US crude futures finished 2016 up about 45% while Brent ended the year up 52%. It was the biggest yearly gain for each of the crude benchmarks since 2009.
Despite frequent volatility, crude oil prices gradually rose overall since February 2016. Market participants are waiting to see whether the Organization of Petroleum Exporting Countries actually cuts its production and whether some non-OPEC producers also cut production as agreed.
The production cuts are scheduled to start this month. Oil prices held largely unchanged in light trading worldwide through end-of-the-year holidays. Prices had risen in recent weeks.
Traders note previous rallies stalled at about $50/bbl, which they attribute to skepticism about OPEC and uncertainty about when US producers might increase production from unconventional plays.
US production will reach 9 million b/d by the end of the first quarter, said Jim Ritterbusch, president of Ritterbusch & Associates.
“There’s going to be incentive for producers to keep increasing their drilling rigs [and] that will translate into higher production,” he said.
The latest US rig count tally from Baker Hughes Inc. showed an increase, jumping 5 units to 658 total during the week ended Dec. 30 (OGJ Online, Dec. 30, 2016).
Ole Hansen, Saxo Bank head of commodity strategy, issued a Jan. 3 note saying oil markets are off to a good start in 2017 but the path ahead looks “very bumpy.” He expects momentum from December 2016 trading is likely to carry oil prices higher for at least the short term.
“The focus during the coming weeks will be squarely on the commitment of OPEC and non-OPEC producers to cut output,” Hansen said.
Energy prices
The February crude oil contract on the New York Mercantile Exchange dropped 5¢ on Dec. 30 to close at $53.72/bbl. The March contract declined 6¢ to $54.66/bbl.
The natural gas contract for February was down nearly 8¢ to a rounded $3.72/MMbtu. The Henry Hub spot market for gas closed at $3.68/MMbtu on Dec. 29. No Dec. 30 price was available.
Heating oil for January edged up less than a penny to a rounded $1.70/gal. Reformulated gasoline stock for oxygenate blending for January declined nearly 2¢ to a rounded $1.66/gal.
The Brent crude contract for March on London’s ICE was down 3¢ to $56.82/bbl. The April contract decreased 1¢ to $57.49/bbl. Gas oil for January closed Dec. 30 at $501/tonne, down $1.75.
The average price for OPEC’s basket of benchmark crudes for Dec. 30 was $53.30/bbl, down 16¢.
Contact Paula Dittrick at [email protected].
