Oil prices post 45pc increase in 2016 | daily-sun.com

Oil prices post 45pc increase in 2016

It was the biggest annual gain in 7 years

Sun Desk     1st January, 2017 11:10:05 printer

Oil prices saw modest losses in the final trading session of 2016, but scored the biggest yearly rise since 2009.

 

On the New York Mercantile Exchange, light, sweet crude futures for delivery in February fell 5 cents, or 0.1 percent, to close at $53.72 a barrel, according to MarketWatch website.

 

On a most-active basis, the US benchmark futures contract saw a nearly 45 percent calendar-year rise and a more-than-8 percent jump in December, fueled in part by expectations members of the Organization of the Petroleum Exporting Countries and other major producers will abide by an agreement to curb output.

 

The annual rise was the first in two years, “and while the market saw a rocky road to get to this point with wild swings and at times historic volatility, the surge into the end of the year may have set a low in oil that could last for years,” said Phil Flynn, senior market analyst at Price Futures Group, in a note.

 

Brent crude on London’s ICE Futures exchange declined 22 cents, or 0.4 percent, to $56.63 a barrel. The global benchmark saw an annual rise of 52 percent, which was also its largest yearly rise since 2009.

 

Trading remained tepid ahead of the New Year holiday.

Global oil markets will be closed Monday.

 

Futures saw little reaction to data from oil-services firm Baker Hughes, which reported that the number of active US oil rigs rose by two in the latest week to 525.

 

It was a volatile year for oil futures, indeed. The US benchmark extended a rout in the beginning of the year that took it to a nearly 13-year low below $27 a barrel, before beginning a rebound that more than doubled the price of crude.

 

Energy Information Administration data on Thursday showed that US crude inventories grew 614,000 barrels in the week ended Dec. 23, a moderate rise compared with the 4.2-million barrels increase tipped by the industry group American Petroleum Institute, but still above the 1.2-million barrel contraction forecast by analysts surveyed by The Wall Street Journal.

 

At 486.1 million barrels, US crude oil inventories are near the upper limit of the average range for this time of the year, the EIA said.

 

“The main driver behind last week’s build was a slowdown in refinery activity,” said S&P Global Platts, noting that the refinery utilization rate fell 0.5 percent to 91 percent of total capacity. This is the time of the year when crude stocks usually fall, as refiners increase production.

 

Gasoline stocks decreased by 1.6 million barrels, while distillates fuel inventories dropped by 1.9 million barrels in the same week. Oil production also fell by 20,000 barrels from a week earlier, to 8.76 million barrels, roughly 4.4 percent lower than same period last year.

 

Analysts say the current downtrend in US oil production could reverse as oil prices rise, frustrating OPEC’s latest effort to lift prices by cutting the group’s overall output.

 

In November, after more than two years of low prices, the cartel and 11 non-OPEC players in a landmark pact agreed to slash production by almost 1.8 million barrels a day.

 

If fully implemented, the move could push oil prices to the $60 a barrel range early next year, and to $70 in 2018.

 

“The market has more faith that the participating nations will comply with the assigned production quotas this time because everyone is eager to get the prices up,” said Gao Jian, energy analyst at SCI International.

 

A global crude glut has plagued the oil market since mid-2014, sending prices plunging and weighing on rebound efforts.

 

Since the inking of the deal, several OPEC members have voiced their commitment to the cut. However, most market watchers are waiting to see the production reports for the first few months of 2017 to gauge whether producers have really made good on their pledges. In the past, producers have been known to cheat and produce above their allotted limits.

 

Nymex reformulated gasoline blendstock for January delivery fell 1.69 cents, or 1 percent, to $1.6651 a gallon. Gasoline ended a three-year streak of annual declines with a 31.4 percent rise, its biggest annual percentage jump since 2009.

 

Nymex natural gas for February delivery dropped 7.8 cents, or 2.1 percent, to $3.724 per million British thermal units. Natural gas has jumped nearly 12 percent in December, aided in part by forecasts for colder-than-normal weather in parts of the US For the year, natural gas’s 59.4 percent annual rise was the strongest in 11 years.

 

Heating oil for January delivery eked out a minor gain Friday to end at 60.36 cents a gallon. For the year, the fuel advanced nearly 55 percent, its largest one-year percentage gain since 2007.


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