Crude oil prices reached their highest levels in more than a year during Dec. 6 trading with the light, sweet crude oil contract for January settling at nearly $52/bbl while Brent crude oil for February closed at nearly $55/bbl on the London market.
The Organization of Petroleum Exporting Countries agreed to slash its output by roughly 1.2 million b/d provided that non-OPEC members also cut production. The agreement is scheduled to become effective Jan. 1, 2017.
OPEC has invited representatives from 14 countries to meet in Vienna Dec. 10 to discuss production levels. OPEC wants its non-OPEC counterparts to cut 600,000 b/d, of which OPEC expects Russia to cut 300,000 b/d.
Russia, Oman, Bahrain, and Azerbaijan have confirmed they are coming to the meeting, OPEC said, adding that Mexico and Kazakhstan also likely will attend.
Eugen Weinberg, head of commodity research at Commerzbank AG, noted Russia reportedly produced a record 11.2 million b/d in November. Russia government officials previously said any production cut would be based on the November level.
“Russia is the ultimate beneficiary of this deal because not only do they benefit from the higher oil price but also from the market share they can take from OPEC,” Weinberg said. He suggests Russia still would produce significantly more crude oil in the first half of 2017 than it was just a few months ago.
The January crude oil contract on the New York Mercantile Exchange gained 11¢ on Dec. 5 to close at $51.79/bbl. The February contract rose 18¢ to $52.83/bbl.
The natural gas contract for January climbed 2¢ to a rounded $3.65/MMbtu. The Henry Hub spot market for natural gas closed at $3.60/MMbtu, up 19¢.
Heating oil for January fell less than a penny to remain at a rounded $1.66/gal. Reformulated gasoline stock for oxygenate blending for January also decreased less than 1¢ to remain at a rounded $1.56/gal.
The Brent crude contract for February on London’s ICE was up 48¢ to $54.94/bbl. The March contract rose 45¢ to $55.59/bbl. Gas oil for December closed Dec. 5 at $477/tonne, up $2.
The average price for OPEC’s basket of benchmark crudes on Dec. 5 gained 83¢ to $51.32/bbl.
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