MARKET WATCH: Crude prices fall as tensions ease about Saudi Arabia

Light, sweet crude oil prices on the New York market fell Nov. 10 to settle below $57/bbl while Brent crude oil prices fell modestly in London but still settled above $63/bbl.

Light, sweet crude oil prices on the New York market fell Nov. 10 to settle below $57/bbl while Brent crude oil prices fell modestly in London but still settled above $63/bbl.

Both benchmarks ended the week higher for a fifth consecutive week. US crude prices had reached above 2-year highs during the week ended Nov. 10, but energy commodities prices were mixed in Nov. 13 trading.

Analysts said fears of a major disruption in the Middle East eased somewhat days after top exporter Saudi Arabia detained royals and businessmen in what it called a corruption investigation.

“If in such an important oil nation something happens which you didn’t expect at all, you start to price in a risk premium,” said Giovanni Staunovo, UBS Wealth Management analyst.

Analysts said oil investors anticipate the Organization of Petroleum Exporting Countries will extend its ongoing production-cut targets. Some non-OPEC countries, including Russia, also are participating in production-cut targets.

OPEC meets Nov. 30 in Vienna where OPEC delegates are expected to discuss an extension to targets due to expire in March 2018.

“The market is still convinced that OPEC will succeed in tightening the market to a sufficient extent by extending its production cuts,” Commerzbank analysts said in a research note.

UAE Oil Minister Suhail Mohamed Faraj al Mazrouei told the Wall Street Journal that an extension to OPEC’s production cuts was likely.

“I haven’t heard anyone talking about not considering an extension, but the timing, the period of extension is subject to discussion,” al Mazrouei said from the Abu Dhabi International Petroleum Exhibition & Conference, which started Nov. 13.

Export levels also are likely to be discussed during the OPEC meeting.

The US rig count increased by 9 for the week ended Nov. 10, Baker Hughes reported. The latest tally for oil-directed rigs was 738 while gas-directed rigs held unchanged at 169 (OGJ Online, Nov. 10, 2017).

Energy prices

The December light, sweet crude contract on the New York Mercantile Exchange fell 43¢ on Nov. 10 to $56.74/bbl. The January 2018 contract dipped 41¢ to $56.98/bbl.

The NYMEX natural gas price for December increased 1¢ to a rounded $3.21/MMbtu. The Henry Hub cash gas price was $3.14/MMbtu, down 4¢.

Heating oil for December fell 1¢ to a rounded $1.95/gal. The NYMEX reformulated gasoline bloodstock for December fell less than a penny to remain at a rounded $1.82/gal.

The Brent crude contract for January 2018 on London’s ICE decreased 41¢ to $63.52/bbl. The February 2018 contract fell 33¢ to $63.41/bbl. The gas oil contract for November held unchanged at $569/tonne.

OPEC’s basket of crudes on Nov. 10 was $61.91/bbl, up 21¢.

Contact Paula Dittrick at paulad@ogjonline.com.

More in General Interest