The light, sweet crude oil price on the New York market and Brent crude oil price on the London market each gained about $1/bbl for January delivery on Nov. 28 in volatile trading ahead of the Nov. 30 meeting of the Organization of Petroleum Exporting Countries in Vienna.
OPEC has proposed capping production at 32.5-33 million b/d, but questions remain as to whether the cartel will reach an agreement to reduce production quotas or freeze production at existing levels. Analysts say oil prices could tumble if the meeting ends inconclusively.
Commerzbank analysts said the oil market’s “hopes and fears” will drive price fluctuations although they said prices held up better than expected after reports that OPEC delegates left a Nov. 28 preliminary meeting without reaching an agreement.
Indonesia Energy Minister Ignasius Jonan said Nov. 29 that Indonesia remains undecided about whether to join the proposed production cuts. Jonan said he had no expectations for the Nov. 30 OPEC meeting, adding he had “a mixed feeling” about the likely result.
Libya and Nigeria are expected to be exempted from any production quota cut. Iran and Iraq have said they also want to be exempt although Nov. 29 news reports indicated they might be willing to freeze production levels.
That would leave Saudi Arabia, Kuwait, Qatar, and UAE to absorb most of the proposed cuts in production quotas if enough crude output were to be cut to change the world oversupply of crude. The four account for nearly half of the 33.6 million b/d production that the cartel reported for October (OGJ Online, Nov. 11, 2016).
Russia, a non-OPEC producer, has said it is only willing to hold production at 11.2 million b/d. Russian oil officials have said this amounts to a production reduction because Russia otherwise would have increased its production levels
Olivier Jakob, a Petromatrix analyst, said Saudi Arabia probably wanted an early agreement before the meeting so it could present a proposal to Russian oil officials.
The natural gas contract for December climbed nearly 15¢ to a rounded $3.23/MMbtu. The Henry Hub spot market for natural gas closed at $2.91/MMbtu after being closed Nov. 25.
Heating oil for December rose 4¢ to a rounded $1.51/gal. The price for reformulated gasoline stock for oxygenate blending for December gained 4¢ to a rounded $1.41/gal.
The Brent crude contract for January on London’s ICE was up $1 to $48.24/bbl. The February contract gained 99¢ to $49.21/bbl. The December gas oil contract fell $5.50 to $440.25/tonne.
The average price for OPEC’s basket of benchmark crudes on Nov. 28 was $43.84/bbl, down $1.04.
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