Oil Prices Stay Range-Bound and Boring

Oil Prices Stay Range-Bound and Boring
WTI and Brent crude oil prices showed some positive momentum early Thursday but ultimately posted day-on-day-losses.

West Texas Intermediate (WTI) and Brent crude oil prices showed some positive momentum early Thursday but ultimately posted day-on-day losses.

The December WTI contract price lost 35 cents Thursday to settle at $56.77 per barrel. The light crude marker traded within a range from $56.63 to $57.79.

Brent crude for January delivery posted a more modest nine-cent decline, ending the day at $62.28 per barrel.

“Oil prices have been range-bound and largely boring due to the upcoming OPEC meeting and mediocre, but not bad, economic outlook,” said Campbell Faulkner, senior vice president and chief data analyst at the interdealer commodities broker OTC Global Holdings. “Coupled with continuing ‘will they or won’t they’ uncertainty between the U.S. and China, EU – really any trading partner, volatility in the market has been driven out barring an extreme geopolitical event.”

Faulkner commented that crude’s increasing futures liquidity – meaning cash-settled – versus overall physical supply has also had an effect.

The market has “become somewhat more of a financial index as compared to a hard deliverable futures market of the past,” Faulkner explained. “That has caused the prices of Brent and WTI to act somewhat like stores of value in addition to being commodity futures.”

Anish Kapadia, U.K.-based oil and gas consultant and managing director with Akap Energy Ltd., noted that oil prices had erased Thursday’s earlier gains following this week’s release of U.S. crude inventory data from the Energy Information Administration (EIA). He explained the EIA figures showed that domestic commercial crude inventories rose by 2.2 million-barrels last week – higher than the 1.4 million-barrel build analysts had anticipated. Moreover, he said the EIA data countered figures from the American Petroleum Institute showing an unexpected crude draw.

“Oil prices earlier continued to rally from yesterday on the back of growing expectations of much lower U.S. production growth in 2020, with OPEC in particular acknowledging this,” continued Kapadia. “Also, Saudi production appears to be increasing back to or even higher than pre-attack levels (before Sept. 14, 2019) and the country is under the spotlight with the recent launched initial public offering of Saudi Aramco.”

Like the oil futures contracts, reformulated gasoline (RBOB) ended the day lower. December RBOB shed two cents to settle just below $1.62 per gallon.

Unlike the above benchmarks, Henry Hub natural gas finished the day higher – its first day-on-day gain since Nov. 8. December gas futures settled at $2.65, reflecting a five-cent gain.

To contact the author, email mveazey@rigzone.com.


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