Crude oil prices dropped modestly, settling under $53.80/bbl on Dec. 29 after a weekly US government report showed an increase in US crude oil inventories and with uncertainty about supply and demand in the coming year.
Analysts said trading remains light in advance of the New Year’s holiday and also with uncertainty about 2017 oil supply levels. The Organization of Petroleum Exporting Countries as well as other producers have said they will cut production levels starting in January.
The US Energy Information Administration said crude supplies, excluding the Strategic Petroleum Reserve, increased 600,000 bbl for the week ended Dec. 23. The latest total estimate was 486.1 million bbl, which EIA called near the upper limit of the average range for this time of year (OGJ Online, Dec. 29, 2016).
Analysts surveyed by The Wall Street Journal in advance had forecast the inventory would drop by 1.4 million bbl.
The Petroleum Status Report estimated total US oil production for the week ended Dec. 23 at 8.76 million b/d, down 20,000 b/d.
EIA noted a decline of 30,000 b/d in production across the Lower 48 offset Alaska’s production increase of by 10,000 b/d for the week.
The February crude oil contract on the New York Mercantile Exchange dropped 29¢ on Dec. 29 to close at $53.77/bbl. The March contract declined 23¢ to $54.72/bbl.
The natural gas contract for February was down nearly 10¢ to a rounded $3.80/MMbtu. The Henry Hub spot market for gas closed at $3.68/MMbtu, up 2¢. But forecasts for colder weather across much of the US were expected to drive higher natural gas prices, analysts said.
A high-pressure ridge was expected over Alaska, sending Arctic cold across the US during January. That would end mild temperatures. US natural gas futures had fallen recently given mild temperatures for late December.
Heating oil for January edged up less than a penny to a rounded $1.70/gal. Reformulated gasoline stock for oxygenate blending for January rose nearly 1¢ to a rounded $1.68/gal.
The Brent crude contract for February on London’s ICE was down 8¢ to $56.14/bbl. The March contract also decreased 11¢ to $56.85/bbl. Gas oil for January closed Dec. 29 at $502.75/tonne, up $2.25.
The average price for OPEC’s basket of benchmark crudes for Dec. 29 was unavailable.
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