The US light, sweet crude oil futures contract for January was down by more than $1 to settle below $50/bbl on the New York market. Traders attributed falling prices to what they called growing skepticism that the Organization of Petroleum Exporting Countries actually will cut production levels.
Oil prices started the week by reaching highs not seen since July 2015, but the rally since has stalled on concerns that OPEC can deliver promised production cuts (OGJ Online, Dec. 6, 2016).
OPEC on Nov. 30 agreed to cut cartel production by roughly 1.2 million b/d provided that non-OPEC countries reduced their overall production by 600,000 b/d. A Dec. 10 meeting is scheduled in Vienna between OPEC and non-OPEC countries.
Concerns about OPEC outweighed a US weekly inventory report that showed a bigger-than-expected drop in crude oil supplies.
The US Energy Information Administration estimated the crude oil inventory, excluding the Strategic Petroleum Reserve, declined by 2.4 million b/d for the week ended Dec. 2 compared with the previous week.
The latest total was 485.8 million bbl, marking the upper limit of the average range for this time of year (OGJ Online, Dec. 7, 2016).
Traders said oil prices were pressured downward by an estimated increase of 3.8 million bbl at the Cushing, Okla., hub.
“The EIA report kind of accentuated some selling pressure,” said Jim Ritterbusch, president of Ritterbusch & Associates. He described the overall inventory report as looking “bearish.”
The January crude oil contract on the New York Mercantile Exchange declined $1.16 on Dec. 7 to close at $49.77/bbl. The February contract fell $1.03 to $50.94/bbl.
The natural gas contract for January dropped 3¢ to a rounded $3.60/MMbtu. US cash gas prices increased. The Henry Hub spot market for gas closed at $3.76/MMbtu, up 5¢.
Heating oil for January fell nearly 2¢ to a rounded $1.62/gal. Reformulated gasoline stock for oxygenate blending for January decreased nearly 3¢ to a rounded $1.51/gal.
The Brent crude contract for February on London’s ICE was down 93¢ to $53/bbl. The March contract declined 87¢ to $53.78/bbl. Gas oil for December closed Dec. 7 at $468.50/tonne, down $2.25.
The average price for OPEC’s basket of benchmark crudes for Dec. 7 was unavailable.
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