Light, sweet crude oil prices dropped more than $1/bbl to settle above $50/bbl for the November contract on the New York market Oct. 20 while US natural gas future prices also fell after a government report showed a weekly injection into gas storage levels.
Analysts said oil prices are holding relatively firm as the Organization of Petroleum Exporting Countries considers a proposed cut in production quotas. OPEC’s next meeting is scheduled for Nov. 30.
Meanwhile, Russian Energy Minister Alexander Novak was expected to meet during the weekend with Saudi Arabia’s oil officials.
The Energy Information Administration estimated US gas in underground storage at 3.836 tcf as of Oct. 14, marking a net increase of 77 bcf from the previous week (OGJ Online, Oct. 20, 2016).
The Gas Storage Report showed stocks were 46 bcf higher than last year for the same time and 185 bcf above the 5-year average of 3.651 tcf. Both US gas futures and spot prices fell after the report was released.
J. Marshall Adkins of Raymond James & Associates in Houston said he believes overall long-term gas fundamentals are improving.
“We expect that the market is focused on the improving demand fundamentals for 2017, which we believe should lead to higher gas prices,” Adkins said in an Oct. 21 research note. Those fundamentals include US gas production declines and strong gas demand.
The natural gas contract for November dropped nearly 3¢ to a rounded $3.14/MMbtu. On the spot market, the Henry Hub gas price dropped 5¢ to $3.09/MMbtu.
Heating oil for November declined nearly 3¢ to a rounded $1.56/gal. The price for reformulated gasoline stock for oxygenates blending for November dropped by a rounded 2¢ to a rounded $1.49/gal.
The December Brent crude contract on London’s ICE fell $1.29 to settle at $51.38/bbl, and the January contract decreased $1.17 to settle at $52.25/bbl. The November gas oil contract settled at $461.75/tonne, down $11.50.
The average price for OPEC’s basket of benchmark crudes on Oct.20 was $48.51/bbl, down 55¢.
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