The US light, sweet crude oil futures contract for January delivery dropped 86¢ to settle below $51/bbl in New York while the Brent crude oil price for February dropped about $1 to settle below $54/bbl on the London market on Dec. 6.
The decline marked a pause in a price rally. The Organization of Petroleum Exporting Countries announced Nov. 30 that it plans to trim production levels by roughly 1.2 million b/d, starting in January.
“No trend has been interrupted,” Thomas Finlon, director of Energy Analytics Group LLC in Wellington, Fla., told Bloomberg. “The market is clearly in an upward trend. This is probably just a pause before the upcoming OPEC, non-OPEC meeting.”
OPEC scheduled a Dec. 10 meeting with certain non-OPEC producers in Vienna to discuss how non-OPEC producers will trim production. OPEC has said it wants non-OPEC producers to trim by 600,000 b/d of which Russia has agreed to cut production by 300,000 b/d.
BMI Research analysts expect Brent prices will average $55/bbl for 2017 while the crude oversupply drops. High crude inventories worldwide have caused a 2-year oil price slump.
“The OPEC decision will essentially bring forward rebalancing by more than 6 months, leveraging stronger seasonal demand in the summer to unwind the bloated crude stocks,” BMI analysts wrote in a research note. “Naturally, compliance by both OPEC and non-OPEC members will be essential, otherwise the market will likely remain in oversupply to at least” third-quarter 2017.
The natural gas contract for January dropped nearly 2¢ to a rounded $3.63/MMbtu. US cash gas prices increased. The Henry Hub spot market for gas closed at $3.71/MMbtu, up 11¢.
Heating oil for January fell nearly 2¢ to a rounded $1.64/gal. Reformulated gasoline stock for oxygenate blending for January also decreased 2¢ to a rounded $1.54/gal.
The Brent crude contract for February on London’s ICE was down $1.01 to $53.93/bbl. The March contract declined 94¢ to $54.65/bbl. Gas oil for December closed Dec. 6 at $470.75/tonne, up $6.25.
The average price for OPEC’s basket of benchmark crudes on Dec. 6 fell 27¢ to $50.98/bbl.
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