The US light, sweet crude oil futures contract for January delivery jumped by about $1 to settle at nearly $51/bbl on the New York market Dec. 8. Analysts said oil prices appeared to be holding fairly steady in early Dec. 9 trading pending a Dec. 10 meeting of producers.
The Organization of Petroleum Exporting Countries agreed Nov. 30 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. Representatives of OPEC and some non-OPEC countries are scheduled to meet in Vienna on Dec. 10.
Mexico is among the non-OPEC countries to attend. Mexico is also among many countries that have seen oil investments and consequently production drop during the 2-year price downturn.
At least one analyst suggests it could be difficult to secure additional cuts from such countries.
“I have my doubts on whether they are willing to do that and then the market might be disappointed,” said Hans Van Cleef, ABN AMBO senior energy economist. ABN AMRO has forecast Brent crude will average $55/bbl in 2017.
S&P Global Platts said OPEC oil production for November rose to 33.86 million b/d, noting that OPEC production has climbed for 6 straight months. Platts surveyed OPEC and oil industry officials to reach the OPEC November production estimate.
Meanwhile, Barclays noted that China’s oil and natural gas imports increased during November. Barclays analysts said that this suggest recent economic strengthening is registering across China’s industrial sectors.
“After dipping in October due to refinery turnarounds, crude oil imports rose 840,000 b/d month-on-month in November,” Barclays said. The latest statistics showed oil imports of 7.65 million b/d. Year-to-date crude imports averaged 14% above 2015 levels, likely due to China’s production declines.
The January crude oil contract on the New York Mercantile Exchange gained $1.07 on Dec. 8 to close at $50.84/bbl. The February contract rose 94¢ to $51.88/bbl.
The natural gas contract for January was up 9¢ to a rounded $3.69/MMbtu. US cash gas prices dropped 10¢. The Henry Hub spot market for gas closed at $3.66/MMbtu.
Heating oil for January rose less than 1¢ to a rounded $1.63/gal. Reformulated gasoline stock for oxygenate blending for January decreased less than a penny to a rounded $1.50/gal.
The Brent crude contract for February on London’s ICE was up 89¢ to $53.89/bbl. The March contract increased 82¢ to $54.60/bbl. Gas oil for December closed Dec. 8 at $466.75/tonne, down $1.75.
The average price for OPEC’s basket of benchmark crudes for Dec. 8 was $50.04/bbl, down 18¢.
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