Brent crude oil prices on the London market reached a 4-year low Nov. 11 upon anticipation by traders and analysts that the Organization of Petroleum Exporting Countries will take no action to reduce abundant world oil supply. US light, sweet crude on the New York market gained slightly Nov. 11.
OPEC is scheduled to meet Nov. 27. The December ICE contract for Brent settled at $81.67/bbl on Nov. 11, down 67¢ and marking the lowest closing price since Oct. 19, 2010.
Kuwaiti and UAE oil ministers said earlier this week that they are not concerned with current oil prices, and Kuwait Oil Minister Ali Al-Omair said he doesn’t expect OPEC will cut its output quota.
“I don’t think there will be any cut in the production,” Al-Omair said during a conference in Abu Dhabi. “We feel prices will settle down once surplus oil is absorbed.”
Talking with reporters at the same conference, UAE Oil Minister Suhail Al Mazrouei said OPEC members are committed to supplying oil worldwide, and markets shouldn’t “panic.”
Morningstar Equity Research issued a research note in late October saying its analysts see the crude supply-demand imbalance as a short-term issue, meaning 18-24 months.
“At present, it appears that markets will be oversupplied with crude, and oil prices will take a hit as a result,” Morningstar said. “Lower prices then reduce returns for new investment and make marginal projects noncommercial. However, it takes the physical market a couple of quarters to react, but eventually supply will tighten as marginal wells don’t get drilled and marginal production doesn’t make it to market.”
The natural gas contract for December edged down by less than a penny to a rounded $4.25/MMbtu. The cash gas price at Henry Hub, La., was $4.06/MMbtu, down 10¢.
Heating oil for December delivery also was down less than a penny to remain at a rounded $2.47/gal. Reformulated gasoline stock for oxygenate blending for December delivery rose by a fraction of a cent to remain at a rounded $2.10/gal.
The ICE crude contract for January 2015 delivery dropped 56¢ to $82.39/bbl. The ICE gas oil contract for November dipped $17.50, settling at $725/tonne.
The average price for OPEC’s basket of 12 benchmark crudes dove by $1.71 to $77.27/bbl on Nov. 11.
Contact Paula Dittrick at email@example.com.
*Paula Dittrick is editor of OGJ's Unconventional Oil & Gas Report.