Light, sweet crude prices settled above $33/bbl on the New York market Jan. 28 and Brent crude oil did the same on the London market. The gains followed comments by Russian energy officials that they would talk with the Organization of Petroleum Exporting Countries next month about output.
The Wall Street Journal reported a senior OPEC official refuted suggestions that production cuts could result, and many analysts also were skeptical.
“While we view this outcome as unlikely, a 5% production cut by just Saudi Arabia and Russia would be sufficient to bring the market close to balance,” said Jason Gammel, oil analyst at Jefferies. “A balanced market…would set the stage for oil price recovery.”
Oil prices started the year with a tumble below $30/bbl, which prompted Citigroup to reset its price expectations for the year.
Credit Suisse Group AG lowered its oil price forecast this month, saying it now expects Brent will average $36.25/bbl for 2016. In September 2015, the bank had forecast Brent would average $58/bbl for 2016.
Citigroup Inc. also recently reduced its oil price estimate, saying Brent will average $40/bbl in 2016. That compared with a forecast of $51/bbl Citigroup made in November 2015.
“Unless material production declines emerge in the next 3 to 6 months, it will be hard to see much upside in crude prices,” Citigroup said.
The NYMEX natural gas contract for March gained 2.5¢ to a rounded $2.18/MMbtu. The Henry Hub gas price declined 12¢ to $2.12/MMbtu on Jan. 28.
Heating oil for February delivery rose 0.5¢ to remain at a rounded $1.03/gal. The price for reformulated gasoline stock for oxygenates blending for February was up 3¢ to a rounded $1.08/gal.
The March ICE contract for Brent crude gained 79¢ to settle at $33.89/bbl on Jan. 28, and the April contract climbed 87¢ to $34.80/bbl. The ICE gas oil contract for February was $307.75/tonne, up $15.75.
The average price for OPEC’s basket of 12 benchmark crudes for Jan. 28 was $28.28/bbl, up $1.88.
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