MARKET WATCH: Higher oil prices attributed to production-cut compliance

The light, sweet crude oil price for February rose above $48/bbl on the New York market Jan. 7 while Brent crude oil price for March settled above $57/bbl, which analysts attributed to production-cut plans by the Organization of Petroleum Exporting Countries and others. OPEC officials told the Wall Street Journal that Saudi Arabia plans to cut crude exports to about 7.1 million b/d by Jan. 31 in efforts to support Brent oil prices of $80/bbl or higher.

Jan 8th, 2019

The light, sweet crude oil price for February rose above $48/bbl on the New York market Jan. 7 while Brent crude oil price for March settled above $57/bbl, which analysts attributed to production-cut plans by the Organization of Petroleum Exporting Countries and others.

OPEC officials told the Wall Street Journal that Saudi Arabia plans to cut crude exports to about 7.1 million b/d by Jan. 31 in efforts to support Brent oil prices of $80/bbl or higher.

On Jan. 8, the WSJ reported Saudi oil exports have declined since late last year. Saudi Arabia exported about 7.3 million b/d in December 2018 and 7.9 million b/d in November 2018.

Harry Tchilinguirian of BNP Parisbas said oil investors are “refocusing on fundamentals” like supply.

OPEC and 10 non-OPEC producers, led by Russia, agreed Dec. 7 to collectively cut output by 1.2 million b/d during the first half of 2019 to help reduce ample world oil supplies.

Tchilinguirian said oil market participants likely will have a better sense of the “overall cohesiveness of the producer group” and the production cuts’ effectiveness by Jan. 31.

Energy prices

The February light, sweet crude contract on NYMEX gained 56¢ to settle at $48.52/bbl on Jan. 7 while the contract for March delivery settled at $48.82/bbl, up 54¢.

NYMEX natural gas for February fell 10¢ to close at $2.94/MMbtu on Jan. 7.

Ultralow-sulfur diesel for February was up nearly 1¢ to a rounded $1.78/gal. The NYMEX reformulated gasoline blendstock for February nudged down less than a penny to $1.34/gal.

Brent for March gained 27¢ to $57.33/bbl on London’s International Commodity Exchange while the April contract gained 34¢ to settle at $57.55/bbl. The gas oil contract was $543.25/tonne on Jan. 7, up $14.75.

The average price for OPEC’s basket of crudes was $56.43/bbl on Jan. 7, up $1.29.

Contact Paula Dittrick at paulad@ogjonline.com.

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