Light, sweet crude prices for February rallied on the New York market in thin trading before the holiday break, settling at $38.10/bbl on Dec. 24, up 60¢. Analysts largely attributed the brief oil price rally on a weekly government report that estimated a drop in US oil and product supplies.
Oil price futures were dropping again in early trading on Dec. 28 in New York.
The US Energy Information Administration reported crude oil supplies, excluding the Strategic Petroleum Reserve, fell 5.9 million bbl for the week ended Dec. 18. The latest total was estimated at 484.8 million bbl, the Petroleum Status Report said.
During trading leading up to the Christmas holiday, light, sweet crude prices rose for four consecutive sessions on the New York market, snapping a 3-week losing streak. But one analyst warned against looking for any long-term trends from yearend oil prices.
“Prices over the next 2 weeks will not be indicative of the longer-term trend for 2016,” Daniel Ang, analyst with Phillip Futures, told the Wall Street Journal. “Volumes will remain low due to the holiday season.”
Ang expects US oil stockpiles will continue to decline and US rig counts will continue to drop, but he also believes light, sweet oil prices likely will remain depressed as world oil supplies appear likely to grow with increased oil exports.
Earlier this month, congressional leaders agreed to lift a 40-year-old ban on exports of US-produced crude oil. In addition, oil exports from Iran are expected on world markets again after Western sanctions are lifted in 2016.
The Organization of Petroleum Exporting Countries said the group was unlikely to reduce its production levels next year. But the cartel expects oil prices will rebound in coming years.
In the annual World Oil Outlook released Dec. 22, OPEC forecast the price for its basket of crudes will reach $70/bbl in 2020 and $95/bbl in 2040.
OPEC acknowledged it likely will cut production in coming years. OPEC expects to cut its own production to 30.6 million b/d in 2019, which is more than 1 million b/d lower than its November production. OPEC said its November production of 31.7 million b/d was the highest in 3 years.
The February crude oil contract on the New York Mercantile Exchange gained 60¢ to settle Dec. 24 at $38.10/bbl. The March contract was up 69¢ to settle at $39.11/bbl.
The NYMEX natural gas contract for January rose 4.6¢ to a rounded $2.03/MMbtu. The Henry Hub gas price was $1.54/MMbtu on Dec. 24, marking a decline of 8¢ for the spot price.
Heating oil for January delivery dropped by 1.8¢ to a rounded $1.10/gal. The price for reformulated gasoline stock for oxygenates blending for January was up a rounded 2.3¢ to a rounded $1.26/gal.
The February ICE contract for Brent crude gained 53¢ to $37.89/bbl, and the March contract was up 53¢ to $38.42/bbl. The ICE gas oil contract for January was $339.75/tonne on Dec. 24.
The average price for OPEC’s basket of 12 benchmark crudes for Dec. 24 was $32.14/bbl, up 89¢.
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