Oil Prices Extend Recent Gains

Oil Prices Extend Recent Gains
WTI and Brent crude oil posted gains on the first trading day of the week.

West Texas Intermediate (WTI) and Brent crude oil posted gains on the first trading day of the week.

The December WTI contract price gained 34 cents Monday to settle at $56.54 per barrel. It traded within a range from $55.83 to $57.43.

“WTI traded up today, due to positive chatter about the U.S.-China trade dispute,” said Tom McNulty, Houston-based managing director with Great American Group.

McNulty added, however, there are concerns that the oil demand side may be weakening. He explained that, while attending the Rice Energy Finance Summit in Houston on Friday, he heard three consistent themes from representatives of several different oil companies.

“First, those companies that manage the cost side the best will be fine,” McNulty said. “Second, be sure to model a wide range of commodity prices and cost assumptions as part of 2020 and 2021 planning. And, lastly, some are using $40 as a mean price for WTI to manage leverage more carefully.”

Also climbing Monday was December Brent, which closed at $62.13 to reflect a 44-cent gain.

Monday’s crude settlement prices augment the benchmarks’ strong day-on-day showings on Friday, when WTI added 3.7 percent and Brent gained 3.5 percent.

“Investors continue to have a daily change in perception over whether or not a trade deal between the U.S. and China will be accomplished,” said Tom Seng, Assistant Professor of Energy Business at the University of Tulsa’s Collins College of Business. “The continuing Brexit saga is still creating uncertainty for both the U.K. and Eurozone economies.”

Seng added that a weaker U.S. Dollar over the past week has bolstered crude prices.

Reformulated gasoline (RBOB) settled higher as well Monday, with December RBOB adding nearly one cent to end the day at $1.66 per gallon.

Henry Hub natural gas for December delivery added just under 11 cents during early week trading. Gas futures settled Monday at $2.82.

Seng observed that natural gas prices have benefited from colder weather moving across the U.S. over the past week. He said the outlook going forward – most notably in the large gas-consuming Upper Midwest and Northeast regions – is for more below-normal temperatures.

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


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