MARKET WATCH: NYMEX crude price for January settles under $40/bbl

Oil price prices plummeted on the New York and London markets Dec. 2 with light, sweet crude oil closing below $40/bbl in New York after a US government report showed an unexpected build in oil and product supplies.
Dec. 3, 2015
3 min read

Oil price prices plummeted on the New York and London markets Dec. 2 with light, sweet crude oil closing below $40/bbl in New York after a US government report showed an unexpected build in oil and product supplies.

Oil markets have been volatile in advance of the planned meeting of members of the Organization of Petroleum Exporting Countries in Vienna on Dec. 4. In early Dec. 3 trading, prices appeared to be rebounding on reports that Saudi Arabia will propose production cuts, provided non-OPEC members also cut production.

But most analysts said that non-OPEC producers such as Russia or Mexico are unlikely to agree to any such proposal. Barclays head of commodity research Michael Cohen said he believes OPEC is unlikely to agree on any production quota cuts Dec. 4.

In a Dec. 3 research note, Barclays lowered its 2016 crude oil price forecasts by $3/bbl for light, sweet crude oil and Brent crude oil to average $56/bbl and $60/bbl, respectively.

“We are less bullish on 2016 prices than in our September forecasts,” Barclays said. “Stock levels continue to rise, increasing the cushion to use for 2016.” Still, analysts said they anticipate prices will rise by the end of 2016 but not as steeply as they previously suggested.

“We expect the difference between supply and demand to be back in balance by the end of 2016,” Barclays said.

Meanwhile, the US Energy Information Administration estimated US commercial crude oil inventories, excluding the Strategic Petroleum Reserve, increased 1.2 million bbl for the week ended Nov. 27 compared with the previous week. The current total was 489.4 million bbl, the Petroleum Status Report said.

Analysts surveyed by the Wall Street Journal in advance of the report had anticipated a decline (OGJ Online, Dec. 2, 2015).

Energy prices

The January crude oil contract on the New York Mercantile Exchange dropped $1.91 to settle Dec. 2 at $39.94/bbl. The February contract was down $1.75 to $41.38/bbl.

The NYMEX natural gas contract for January declined by 6.6¢ to a rounded $2.17/MMbtu. The Henry Hub gas price was $2.17 on Dec. 2, up 2¢.

Heating oil for January delivery dropped 6.4¢ to a rounded $1.31/gal. The price for reformulated gasoline stock for oxygenates blending for January was down nearly 7¢ to a rounded $1.29/gal.

The January ICE contract for Brent crude fell $1.95 to $42.49/bbl, and the February contract fell $1.83 to $43.16/bbl. The ICE gas oil contract for December closed at $393/tonne on Dec. 2, down $9.75.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes for Dec. 2 was $38.46/bbl, down 84¢.

Contact Paula Dittrick at [email protected].

*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.

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.

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