MARKET WATCH: Crude oil prices volatile before OPEC meeting

Crude oil prices fell more than $1/bbl on the New York and London markets Nov. 25 while traders waited to see if the Organization of Petroleum Exporting Countries would change production quotas for its members during a Nov. 27 meeting.

Crude oil prices fell more than $1/bbl on the New York and London markets Nov. 25 while traders waited to see if the Organization of Petroleum Exporting Countries would change production quotas for its members during a Nov. 27 meeting.

Prices climbed again in early Nov. 26 trading. Commerzbank issued a research note saying, “The market remains volatile in the run-up to the OPEC meeting.” Ample oil supplies worldwide have triggered falling oil prices for months.

Tim Rezvan, Sterne Agee analyst in New York, said, “The OPEC waiting game is unlikely to produce a meaningfully positive outcome supportive for crude in the near term.”

Sterne Agee forecast US light, sweet crude prices on the New York futures market will average $81/bbl through 2016.

Separately, the Energy Information Administration on Nov. 26 reported US commercial crude oil inventories, excluding the Strategic Petroleum Reserve, increased 1.9 million bbl for the week ended Nov. 21 compared with the previous week.

At 383 million bbl, US crude oil inventories are in the upper half of the average range for this time of the year, EIA said in its weekly Petroleum Status Report.

EIA also issued a Today in Energy saying US retail regular-grade gasoline prices continue to decline, averaging $2.82/gal as of Nov. 24. This average is 47¢/gal lower than a year ago, and the lowest heading into the US Thanksgiving holiday since 2009.

Gasoline supplies build

EIA’s inventory report said total motor gasoline inventories increased by 1.8 million bbl last week, but are in the lower half of the average range.

The levels for both finished gasoline and blending components inventories increased.

Distillate fuel inventories decreased by 1.6 million bbl for the week ended Nov. 21, and EIA said that level was nearly the lower limit of the average range for this time of year.

Propane-propylene inventories fell 2 million bbl last week but are well above the upper limit of the average range.

US refinery inputs averaged about 16 million b/d for the week ended Nov. 21, which was 44,000 b/d more than the previous week’s average.

Refineries operated at 91.5% of capacity last week. Gasoline production increased slightly last week, averaging over 9.6 million b/d. Distillate fuel production increased last week, averaging 4.9 million b/d.

US crude oil imports averaged 7.5 million b/d last week, down 165,000 b/d from the previous week. Over the last 4 weeks, crude oil imports averaged 7.2 million b/d, 6.5% below the same 4-week period last year.

Total motor gasoline imports, including both finished gasoline and gasoline blending components, last week averaged 440,000 b/d. Distillate fuel imports averaged 128,000 b/d last week.

Energy prices

The New York Mercantile Exchange January crude oil contract declined $1.69 on Nov. 25, closing at $74.09/bbl. The February 2015 contract fell $1.70 to $74.17/bbl.

The natural gas contract for December gained 13¢ to a rounded $4.28/MMbtu. The cash gas price at Henry Hub, La., was $4.12/MMbtu, up a rounded 6¢.

Heating oil for December delivery edged down by a fraction of a penny to a rounded $2.39/gal. Reformulated gasoline stock for oxygenate blending for December delivery also dropped less than a penny to remain at a rounded $2.03/gal.

The January 2015 ICE contract for Brent crude oil dipped $1.35 to $78.33/bbl. The February 2015 contract fell $1.39 to $78.76/bbl. The ICE gas oil contract for December fell $12.50, settling at $694.25/tonne.

The average price for OPEC’s basket of 12 benchmark crudes on Nov. 25 was $74.28/bbl, down $1.42.

Contact Paula Dittrick at paulad@ogjonline.com.

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

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