Light, sweet crude oil prices for March delivery rose modestly on the New York market Jan. 24 as did Brent crude oil prices on the London market, but the US crude benchmark fell in early trading Jan. 25 pending release of the weekly US oil and products inventory report.
Oil investors awaited US oil production statistics from the inventory report. US production and the rig count have both risen since other producers announced production cuts.
The Organization of Petroleum Exporting Countries and some non-OPEC producers agreed last year to make production cuts in an effort to support oil prices. The OPEC agreement calls for the cartel to cut about 1.2 million b/d in an attempt to support oil prices.
Libya and Nigeria were exempted from production cuts. Other OPEC members agreed to a specific production cut for their individual country with Saudi Arabia accounting for much of it.
On Jan. 22, a Joint OPEC/Non-OPEC Ministerial Monitoring Committee (JMMC) met for the first time to discuss compliance. The JMMC created a technical committee to research compliance.
“The JMMC expressed its satisfaction regarding the strong level of commitment to the agreed framework," said an OPEC news release.
The International Energy Agency, OPEC, and the US Energy Information Administration all expect steady demand growth in 2017, which would help rebalance the crude oil supply-demand balance worldwide.
Oil investors also are watching to see if the US Federal Reserve raises interest rates this year as anticipated.
“Rising interest rates are certainly a risk for the oil market this year,” said Tom Pugh, an analyst at Capital Economics. He said higher interest rates could trigger a strengthening US dollar, which he called “headwinds for oil prices.”
Interest rate increases often tend to increase currency value, economists note. Oil is traded in dollars so a stronger dollar makes oil more expensive for buyers using other currencies.
The NYMEX crude oil contract for March delivery on the New York Mercantile Exchange rose 43¢ on Jan. 24 to $53.18/bbl. The April crude oil contract climbed 36¢ to $53.86/bbl.
US natural gas futures for February delivery gained nearly 4¢ to a rounded $3.28/MMbtu. The Henry Hub spot gas price jumped up 10¢ to $3.25/MMbtu.
Heating oil for February increased 1.5¢ to a rounded $1.64/gal. Reformulated gasoline stock for oxygenate blending for February gained less than a penny to a rounded $1.58/gal.
The Brent crude contract for March on London’s ICE climbed 21¢ to $55.44/bbl. The April contract was up 22¢ to $55.85/bbl. Gas oil for February closed Jan. 24 at $488.50/tonne, up $3.
The average price for OPEC’s basket of benchmark crudes on Jan. 24 was $52.51/bbl, up 41¢.
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