MARKET WATCH: NYMEX crude price rises in advance of inventory

Crude oil prices gained modestly on the New York market to settle slightly higher Dec. 1 while analysts awaited the latest weekly oil and product inventory numbers from the US government.

The Energy Information Administration estimated US commercial crude oil inventories, excluding the Strategic Petroleum Reserve, increased 1.2 million bbl for the week ended Nov. 27 compared with the previous week. The current total was 489.4 million bbl, the Petroleum Status Report said.

Separately the American Petroleum Institute estimated inventories rose 1.6 million bbl. Analysts surveyed by the Wall Street Journal had expected inventories to decline by 300,000 bbl.

Members of the Organization of Petroleum Exporting Countries are slated to meet in Vienna on Dec. 4. Oil prices started falling during 2014 with the price downturn steepening after OPEC members decided in November 2014 to maintain output levels despite the weaker prices.

“The market is certainly looking ahead,” to the OPEC meeting and also anticipating Iran will add substantial quantities of oil to the market starting in January, said Andy Lipow of Lipow Oil Associates.

Wood Mackenzie Ltd. said its current oil market outlook assumed that OPEC, principally Saudi Arabia, does not cut production quotas to support oil prices.

“We expect OPEC will likely maintain its production ceiling at the current level or adjust it upward slightly to reflect Indonesia’s rejoining the group while maintaining the goal of retaining market share in general,” WoodMac said in a news release.

A few producers have said OPEC should cut production to support prices, but unless others, including non-OPEC Russia, agree to reduce output, Saudi Arabia will not reduce its production, WoodMac said.

“Importantly Saudi Arabia has said other OPEC members including Iran and Iraq would need to cut output also, but Iran has stated it will not consider production cuts until after sanctions are lifted and it has regained pre-sanction production levels, which will take time,” WoodMac said.

Gasoline inventories climb

Meanwhile, total motor gasoline inventories increased 100,000 bbl for the week ended Nov. 27, and EIA said that level was well above the upper limit of the average range. Finished gasoline inventories decreased while blending components inventories increased.

Distillate fuel inventories increased 3.1 million bbl and are in the upper half of the average range for this time of year. Propane-propylene inventories fell 2.1 million bbl but are well above the upper limit of the average range.

US refinery inputs averaged 16.8 million b/d for the week ended Nov. 27, which EIA said was 423,000 b/d more than the previous week’s average. Refineries operated at 94.5% of capacity last week. Gasoline production increased, averaging 9.8 million b/d.

Distillate fuel production increased, averaging 5.2 million b/d.

US crude oil imports averaged more than 7.7 million b/d, up 414,000 b/d from the previous week. Over the last 4 weeks, crude oil imports averaged 7.4 million b/d, 0.5% above the same 4-week period last year. Total motor gasoline imports, including both finished gasoline and gasoline blending components, last week averaged 433,000 b/d.

Energy prices

The January crude oil contract on the New York Mercantile Exchange gained 20¢ to settle Dec. 1 at $41.85/bbl. The February contract was up 17¢ to $43.13/bbl.

The NYMEX natural gas contract for January declined by a fraction of a penny to remain at $2.23/MMbtu. The Henry Hub gas price was $2.15 on Dec. 1, up 6¢.

Heating oil for January delivery added a rounded 1.5¢ to a rounded $1.37/gal. The price for reformulated gasoline stock for oxygenates blending for January was up 5.6¢ to a rounded $1.36/gal.

The January ICE contract for Brent crude fell 17¢ to $44.44/bbl. The ICE gas oil contract for December closed at $402.75/tonne on Dec. 1, down $16.75.

The average price for OPEC’s basket of 12 benchmark crudes for Dec. 1 was $39.30/bbl, up 37¢.

Contact Paula Dittrick at

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

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