Crude oil futures on the New York and London markets held steady early on Dec. 19, kicking off a week of reduced trading volumes and potentially increased volatility ahead of the Christmas holiday.
Optimism built late last week that major producers will carry out an agreed upon output limit as Saudi Arabia, Kuwait, and Russia each reportedly showed signs they were moving to restrict oil flow from their assets (OGJ Online, Dec. 16, 2016).
Additional news affecting future supply came over the weekend when The Wall Street Journal said that Libya’s National Oil Co. has stopped the resumption of oil production from El Feel and Sharara fields due to threats by a militia to block pipeline transport of produced oil to coastal ports.
Revived production from Libya and Nigeria has been seen as a possible stumbling block in the Organization of Petroleum Exporting Countries’ effort to follow through on its part of the agreement. OPEC together has pledged to reduce production by 1.2 million b/d for 6 months starting Jan. 1, while some non-OPEC countries, led by Russia, have agreed to cut production by 558,000 b/d.
Libyan oil production fell to 300,000 b/d earlier this year but subsequently doubled to about 600,000 b/d (OGJ Online, Nov. 23, 2016). It had been around 1.6 million b/d prior to the capture and death of dictator Moammar Gadhafi in 2011.
Meanwhile, a stronger US dollar continues to cap further upward movement in prices, and the possibility of future output growth in the US lingers following another increase in Baker Hughes Inc.’s count of active drilling rigs.
Twelve oil-directed rigs came online during the week ended Dec. 16, the oil field services firm reported (OGJ Online, Dec. 16, 2016). They now total 510, an increase of 194 since May 27.
The natural gas contract for January dropped 1.9¢ to a rounded $3.42/MMbtu. The Henry Hub gas spot price closed at $3.46/MMbtu, losing 9¢.
Heating oil for January rose 3.03¢ to a rounded $1.67/gal. Reformulated gasoline stock for oxygenate blending for January increased 1.5¢ to a rounded $1.56/gal.
The Brent crude contract for February on London’s ICE rose $1.19 to $55.21/bbl. The March contract was up $1.11 to $55.82/bbl. The January contract for gas oil rose $15.50 to $490.25/tonne.
The average price of OPEC’s basket of benchmark crudes for Dec. 16 was $51.29/bbl, gaining 33¢.
Contact Matt Zborowski at email@example.com.