MARKET WATCH: NYMEX oil prices subdues awaiting Fed meeting

Crude oil prices for December delivery edged down a penny on the New York market Oct. 27 while analysts and traders await US economic indicators as well as the weekly government petroleum inventory report.

Crude oil prices for December delivery edged down a penny on the New York market Oct. 27 while analysts and traders await US economic indicators as well as the weekly government petroleum inventory report.

The Federal Reserve was scheduled to start a 2-day meeting Oct. 28 to consider interest rates and to review the timetable for ending a 2-year economic stimulus program that involved buying bonds.

US light, sweet crude oil prices have been down 4 consecutive weeks while Brent crude oil prices on the London market have declined 5 consecutive weeks.

Barclays Research Inc. issued a research note Oct. 28 saying its analysts have reduced their first-half 2015 forecasts. The latest forecast for Brent called for a first-quarter average of $88/bbl (previously $95/bbl) and a second-quarter average of $87/bbl (previously $92/bbl).

For the benchmark US light, sweet crude, Barclays analysts now expect an average of $78/bbl in the first quarter (previously $87) and $80/bbl in the second quarter (previously $86/bbl).

Analyst Miswin Mahesh of London noted Barclays left its second half forecast unchanged based in part upon expectations that lower prices will boost oil demand and that the Organization of Petroleum Exporting countries will reduce crude supplies lower than current levels.

Mahesh said he believes oil prices “have bottomed for now.” He said crude oil oversupply appears to be shrinking. He noted that the crude oil market balance appears likely to weaken again in early 2015.

He expects a strong rebound during the second half 2015, saying, “It seems extremely unlikely that oil prices will remain below $100 for very long.”

Energy prices

The New York Mercantile Exchange December crude oil contract dropped 1¢ on Oct. 27, closing at $81/bbl. The January 2015 contract declined 10¢ to $80.70/bbl.

The natural gas contract for November dropped by 6.2¢ to a rounded $3.56/MMbtu. The cash gas price at Henry Hub, La., was up 1¢, closing at $3.55/MMbtu.

Heating oil for November delivery was down by a rounded 1¢ to a rounded $2.47/gal. Reformulated gasoline stock for oxygenate blending for November delivery dropped 1.1¢ to a rounded $2.17/gal.

The December ICE contract for Brent crude oil was down 30¢ to close at $85.83/bbl. The January 2015 contract dropped 27¢ to $86.23/bbl. The ICE gas oil contract for November gained $2.25, settling at $737.75/tonne.

The average price for OPEC’s basket of 12 benchmark crudes was $82.37/bbl on Oct. 27, down 11¢.

Contact Paula Dittrick at paulad@ogjonline.com.

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