Crude oil benchmark prices rose on markets in New York and London by more than $1/bbl Dec. 12 following a Dec. 10 meeting of the Organization of Petroleum Exporting Countries and representatives of some non-OPEC countries.
OPEC has vowed to cut cartel production by 1.2 million b/d starting in January. Non-OPEC countries agreed to cut by 558,000 b/d of which Russia will cut 300,000 b/d (OGJ Online, Dec. 12, 2016).
Goldman Sachs Group issued a report saying that the US light, sweet crude oil price might rise above $60/bbl if OPEC and non-OPEC producers cut production as promised. But the bank also noted that prices could drop to $55/bbl with a rebound in US shale production.
The bank maintained its forecast of $55/bbl West Texas Intermediate oil prices for the first half of 2017.
Saudi Energy Minister Khalid al-Falih told reporters in Vienna on Dec. 10 that he did not expect a big supply response from US shale producers in 2017.
Olivier Jakob, Petromatrix analyst, said Saudi Arabia wanted to get Russia involved in cooperative agreements among oil-producing countries to help oil prices recover from a 2-year downturn.
“This has been a major geopolitical development, and I think it is historic,” Jakob said. “Russia has been very linked to Iran and with this latest development it is also reaching out a little bit to the wider gulf area.”
The natural gas contract for January was down a rounded 24¢ to a rounded $3.51/MMbtu. The Henry Hub spot market for gas closed at $3.57/MMbtu, down 18¢.
Heating oil for January rose 3¢ to a rounded $1.67/gal. Reformulated gasoline stock for oxygenate blending for January increased 3.6¢ to a rounded $1.54/gal.
The Brent crude contract for February on London’s ICE was up $1.36 to $55.69/bbl. The March contract increased $1.31 to $56.37/bbl. Gas oil for January closed Dec. 12 at $491/tonne, up $13.50.
The average price for OPEC’s basket of benchmark crudes for Dec. 12 was $53.24/bbl, up $2.29.
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