MARKET WATCH: Oil prices fall slightly ahead of OPEC meeting

Crude oil prices fell slightly on the New York and London markets Nov. 30 but appeared to be on the rise again in Dec. 1 trading on what analysts called jittery world oil markets ahead of a meeting of members of the Organization of Petroleum Exporting Countries scheduled for Dec. 4 in Vienna.

OPEC is believed unlikely to change its strategy of maintaining high production quotas. Olivier Jakob of Petromatix said he expects continued oil price volatility as oil traders and analysts react to whatever happens at the OPEC meeting.

Matt Parry, analyst with the International Energy Agency in Paris, said OPEC would be “crazy…to turn back now.” He said cartel members overestimated the marginal cost to produce a barrel of US light oil.

“Everyone was talking about $70-80[/bbl] as the marginal cost, and they were wrong,” said Parry, referring to US unconventional plays where efficiency gains have helped maintain or boost production in some areas, such as the Permian basin of Texas, even as oil prices plummeted.

Separately, a Canadian think tank said that of 14 jurisdictions having large oil and natural gas reserves, Texas topped the list followed by the UAE, Alberta, Qatar, and Kuwait.

The Fraser Institute of Calgary reported that Texas was the most attractive jurisdiction for oil and gas investment worldwide based on an annual global survey of petroleum sector executives.

The 2015 Global Petroleum Survey rated 126 jurisdictions around the world based on barriers to investment such as high taxes, costly regulatory obligations, and uncertainty over environmental regulations as well as on estimated oil and gas reserves.

“Texas remains a beacon of stability in the oil and gas sector with its wealth of proven reserves and clear and consistent regulatory environment,” said Kenneth Green, Fraser Institute senior director, natural resource studies, and director of the Global Petroleum Survey.

The survey also featured an alternate ranking format, which ignored proved oil and gas reserves and focuses solely on survey responses about the extent to which government policies can deter oil and gas investment.

In this format, seven out of the top 10 were US locations. The Netherlands ranked No. 1, followed by Alabama, Oklahoma, Texas, Mississippi, Kansas, Arkansas, Saskatchewan, North Dakota, and Manitoba.

Energy prices

The January crude oil contract on the New York Mercantile Exchange fell 6¢ to settle Nov. 30 at $41.65/bbl. The February contract dropped 10¢ to $42.96/bbl.

The NYMEX natural gas contract for January gained 2¢ to $2.23/MMbtu. The Henry Hub gas price was $2.09 on Nov. 30. The Nov. 27 price was unavailable.

Heating oil for December delivery fell 1.5¢ to a rounded $1.34/gal. The price for reformulated gasoline stock for oxygenates blending for December was down 3¢ to a rounded $1.36/gal.

The January ICE contract for Brent crude fell 25¢ to $44.61/bbl. The February contract dropped 27¢ to $45.24/bbl. The ICE gas oil contract for December closed at $419.50/tonne on Nov. 30, up $1.25.

The average price for OPEC’s basket of 12 benchmark crudes for Nov. 30 was $38.93/bbl, down 15¢.

Contact Paula Dittrick at

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

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