Analysts attributed dropping oil prices to a monthly report from the International Energy Agency, which noted record production from the Organization of Petroleum Exporting Countries during October (OGJ Online, Oct. 10, 2016).
Oil prices were dropping again in early Nov. 11 trading in New York. OPEC was scheduled to release its own report Nov. 11, which was expected to confirm that OPEC production had reached new highs. OPEC is considering whether to cap its production levels by changing individual OPEC member production quotas. The cartel meets Nov. 30 in Vienna.
Market participants are growing increasingly skeptical of any agreement because Saudi Arabia, Libya, and Iran are producing more crude oil. Meanwhile, market participants also continued to sort out the implications of the US general election.
Paul McConnell, Wood Mackenzie Ltd. director, global trends, and Simon Flowers, WoodMac chief analyst, said supply-demand fundamentals and the OPEC meeting will have a bigger influence on oil prices than Republican Donald J. Trump taking over as US president in January 2017.
Trump has said he would try to “renegotiate a better deal” regarding the lifting of Iranian sanctions in early 2016 following an international agreement about Iran’s nuclear program. Western powers and the European Union agreed to the pact with Iran, which has since increased its oil production by about 1 million b/d.
“The deal was a global one, and it’s doubtful a Trump administration will have the clout to kill it,” McConnell and Flowers said in a joint WoodMac research note. “More broadly, the stance on trade agreements and a possible imposition of tariffs on China and other exporters of goods will be key to global economic growth. Any slowdown would lead to lower oil-demand growth and defer a recovery in oil markets.”
Some analysts have suggested Trump might reinstate US sanctions against Iran through an executive order. Trump has provided no specifics on his plans.
The natural gas contract for December declined nearly 6¢ to a rounded $2.63/MMbtu. On the spot market, the Henry Hub gas price dropped 14¢ to $2.08/MMbtu.
Heating oil for December was down a fraction of a penny to remain at a rounded $1.44/gal. The price for reformulated gasoline stock for oxygenates blending for December dropped almost 2¢ to remain at a rounded $1.34/gal.
The January Brent crude contract on London’s ICE was down 52¢ to settle at $45.84/bbl. The Brent contract for February declined 50¢ to $46.92/bbl. The November gas oil contract rose 50¢ to $420/tonne.
The average price for OPEC’s basket of benchmark crudes on Nov. 10 was up 77¢ to $42.67/bbl.
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