MARKET WATCH: NYMEX December crude oil price settles above $40/bbl after volatile day

The crude oil price on the New York market for December delivery on Nov. 19 dipped below $40/bbl briefly for a second consecutive day but managed to rebound to close at $40.54/bbl. Despite the rebound, the contract still ended the day with a modest decline compared with the previous day.

The intraday low for crude oil for December was $39.89/bbl Nov. 19. Oil prices had not dipped to that level in intraday trading since August.

US natural gas futures fell after the US Energy Information Administration estimated working gas in storage at 4 tcf as of Nov. 13, a net increase of 15 bcf from the previous week. Stocks were 404 bcf higher than last year at this time and 207 bcf above the 5-year average of 3.793 tcf, the Natural Gas Storage Report said.

Barclays gas analyst Nicholas Potter in New York said high storage levels and resilient production caused Barclays to lower its 2016 gas price forecast to $2.84/MMbtu from $2.95/MMbtu.

“However, the balances should start to tighten in second half 2016 as production growth slows and new demand enters the market in the form of LNG exports, growing pipeline exports to Mexico new industrial demand, and strong power burn,” Potter said. “Weather will be the major facto deciding if the natural gas market tightens in 2016 or faces another year of oversupply.”

Meanwhile, Brent crude oil prices rose slightly on the London market on Nov. 19 after Saudi Arabia Oil Minister Ali al-Naimi said world oil demand was expected to grow by an average of more than 1 million b/d/year, which means industry needs additional production capacity to keep up with demand.

“There is a big drop in the production capacity of oil wells across the world, estimated around 4 million b/d, which means the petroleum industry needs new additional production capacity of around 5 million b/d each year…to meet global demand,” al-Naimi told an energy meeting in Manama, Bahrain.

Energy prices

The December crude oil contract on the New York Mercantile Exchange was down 21¢ on Nov. 19 to $40.54/bbl. The January crude oil contract dropped 23¢ to $41.72/bbl.

The NYMEX natural gas contract for December was down 7¢ to a rounded $2.27/MMbtu. The Henry Hub gas price was up 5¢ at $2.15/MMbtu.

Heating oil for December delivery was down by nearly 1¢ to a rounded $1.37/gal. The price for reformulated gasoline stock for oxygenates blending for December added 2.2¢ to $1.29/gal.

The January ICE contract for Brent crude increased 4¢ to $44.18/bbl. The February contract was up by 2¢ to $45/bbl. The ICE gas oil contract for December closed at $427/tonne, up $4.50.

The average price for the OPEC basket of 12 benchmark crudes for Nov. 19 was $38.52/bbl, up 48¢.

Contact Paula Dittrick at

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

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