MARKET WATCH: Crude prices drop after brief rally on Forties news
Oil prices declined Dec. 12 on markets in New York and London after a rally on news of the shutdown of a key European pipeline system that transports primarily oil but also some natural gas.
During a routine inspection last week, Ineos contractors discovered a hairline crack in an onshore portion at Red Moss near Netherley, roughly 10 miles southwest of Aberdeen (OGJ Online, Dec. 12, 2017). Ineos said repairs of the Forties pipeline system could take several weeks.
US light, sweet crude briefly reached above $58/bbl with Brent touching above $65/bbl during the trading session. Both benchmarks, however, fell by closing.
Separately, Commerzbank analysts said rising production forecasts by the US Energy Information Administration pressured US crude futures lower on Dec. 12.
EIA raised its forecast for average 2018 production above 10 million b/d compared with 9.2 million b/d in 2017. If 2018 production fulfills its forecast, US oil production would exceed a 1970 record of 9.6 million b/d.
The North Sea crude supply interruption from Forties comes as production-cut targets by the Organization of Petroleum Exporting Countries and other major producers, including Russia, reduce worldwide inventories.
On Nov. 30, OPEC and its allies agreed to extend the production cuts by 9 months through Dec. 31, 2018.
Energy prices
The January 2018 light, sweet crude contract on the New York Mercantile Exchange fell 85¢ on Dec. 12 to $57.14/bbl. The February contract dropped 89¢ to $57.16/bbl.
The NYMEX natural gas price for January 2018 declined 15¢ to a rounded $2.68/MMbtu. But spot gas prices moved in the opposite direction. The Henry Hub cash gas price was $2.82/MMbtu, up 2¢.
Ultralow-sulfur diesel for January 2018 fell 1.7¢ to a rounded $1.93/gal. The NYMEX reformulated gasoline blendstock for January 2018 decreased nearly 3¢ to a rounded $1.70/gal.
The Brent crude contract for February 2018 on London’s ICE dropped $1.35 to $63.34/bbl. The March 2018 contract fell $1.27 to $62.73/bbl.
The gas oil contract for January was $571.75/tonne, down $1.
OPEC’s basket of crudes was $62.75/bbl on Dec. 12, up 81¢.
Contact Paula Dittrick at [email protected].
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.