Crude Oil Benchmarks Set Record
The West Texas Intermediate (WTI) and Brent crude oil benchmarks set a record Monday – but not the kind that oil producers typically like.
“WTI and Brent ended the day lower for a record 11th straight session as early gains were wiped away late in the session,” Tom Seng, Assistant Professor of Energy Business with the University of Tulsa’s Collins College of Business, told Rigzone. “Prices received a boost early in trading as the weekend OPEC meeting seemed to indicate production cuts would be coming after the first of the year due to the market having entered ‘bearish’ territory.”
After trading within a range from $59.33 to $61.28, the December WTI settled at $59.93 a barrel Monday. The closing price represents a 26-cent day-on-day drop for the WTI. Meanwhile, the January Brent price dipped 6 cents to end the day at $70.12 a barrel.
Seng pointed out that a potentially bullish indicator gave way to recent temporary exemptions from sanctions on buying Iranian crude oil – and a social media posting Monday by President Trump. He explained that there has been technical support for prices because the WTI has traded below its 5/10/20-day moving average for a few weeks now. Moreover, he said that momentum indicators show that the oil market is in a “very oversold” condition, potentially positioning the market for a sharp rally.
“But, last week’s waivers on crude purchases from Iran, which were granted to eight countries by the U.S., still weighed heavily on prices,” Seng continued. “And, a Monday morning tweet by President Trump in which he hoped OPEC would not cut production seemed to soften prices as well, since the last time he chastised them for high prices they increased output.”
Although crude oil began the week with a decline, December reformulated gasoline (RBOB) did not. In fact, RBOB posted a slight gain of less than two cents to settle near $1.64 a gallon.
The recent bullish streak for December Henry Hub natural gas futures continued Monday. The benchmark picked up seven cents to end the day at $3.79.
“Following Friday’s rally, natural gas surged again today on the incoming cold which has lowered temperatures as far south at Houston,” said Seng. “Storage levels that were about 15 to 16 percent below normal will continue to be of concern.”
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