Light, sweet crude oil prices for December delivery dipped under $50/bbl on the New York market Oct. 25 as market participants said it is looking increasingly unlikely that the Organization of Petroleum Exporting Countries will be able to reach agreement on a proposed production cut.
OPEC representatives are expected to meet with non-OPEC representatives later this week. Iraqi oil officials recently said they want Iraq to be excluded from any production cut, which would put more pressure on Saudi Arabia to cut its own production more. No final decision is expected until OPEC’s Nov. 30 meeting.
“Everyone has a lot to lose if they do not fill in the details and implement a final agreement at the end of next month,” said Mike Wittner, Societe Generale SA head of global oil research. “Of all the developments, the one that worries me the most…is Iraq.”
One long-term issue to be resolved concerns production estimates for individual countries. Iraq and Venezuela have criticized OPEC production estimates involving secondary sources such as analysts and news organizations. The estimates used will be crucial in determining any production quota revisions.
Separately, analysts awaited the Oct. 26 release of the weekly US government report on crude and product inventories. Oil prices fell in early Oct. 26 trading in New York pending the report.
The natural gas contract for November fell nearly 6¢ to a rounded $2.77/MMbtu. On the spot market, the Henry Hub gas price declined 8¢ to $2.67/MMbtu.
Heating oil for November fell 1.7¢ to a rounded $1.56/gal. The price for reformulated gasoline stock for oxygenates blending for November dropped a fraction of a penny to remain at a rounded $1.50/gal.
The December Brent crude contract on London’s ICE declined 67¢ to settle at $50.79/bbl. The November gas oil contract settled at $462.50/tonne, down $1.75.
The average price for OPEC’s basket of benchmark crudes on Oct. 25 was unavailable because the OPEC Secretariat offices were closed Oct. 26.
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