Oil Prices Rise for Third Straight Day
December 02 2016 - 04:05PM
Dow Jones News
By Alison Sider and Neanda Salvaterra
Oil prices rose for a third straight day on Friday, after OPEC's
agreement to cut output for the first time in eight years.
U.S. crude futures rose 62 cents, or 1.21%, to $51.62 a barrel
on the New York Mercantile Exchange, its highest settlement since
July, 2015. Brent, the global benchmark, gained 52 cents, or 0.96%,
to $54.46 on London's ICE Futures Exchange.
Crude prices have surged since the Organization of the Petroleum
Exporting Countries agreed to pull back their output by 1.2 million
barrels a day. "At this point I don't think too many people are
willing to stand in front of it," said Ric Navy, senior vice
president for energy futures at RJ O'Brien & Associates.
Oil's advances stalled overnight, however, with U.S. crude
futures pulling back to $50.18 as investors took profits following
the dramatic rally. But crude prices resumed their march higher
later, as the market looked set to hold on to most of its recent
gains.
U.S. crude futures gained 12.2% this week -- the largest weekly
percentage gain since 2009. But market participants say crude's
rally could be running out of steam.
"I think it's getting close to the end of its rope," said Mark
Waggoner, president of Excel Futures. "I see it getting tired and
falling back. I just don't see this as a game changer when they're
pumping as much as they are."
The deal to cut production is expected to take effect in
January, and participating oil-producing nations will reassess in
six months with an option to extend the accord for another six
months.
If the deal is fully observed, it could shift the market into a
deficit as early as the first half of next year. Brent prices could
move higher to average between $55 and $60 a barrel in 2017, said
Simon Flowers, chief analyst at consultancy Wood Mackenzie.
"However, this does depend on OPEC being very careful to meet the
terms of the agreement," he cautioned.
Skepticism over members' compliance with production quotas
remains, as members have cheated their quotas in the past by
underreporting or producing beyond their allotted limits.
Moreover, the OPEC supply action could cause some oil producers
to lose market share as oil producers who aren't participating in
the deal ramp up their output.
"It is a dangerous game that Saudi Arabia is playing," said
Michael Cohen, the head of energy commodities research at Barclays.
"Should prices rise too high then the amount of shale oil that
comes into the market will eventually start to cut into their
market share."
The U.S. put three more oil rigs back to work in the latest
week, bringing total active rigs to 477, the most since late
January, according to Baker Hughes.
Gasoline futures gained 1.21 cents, or 0.78%, to $1.5591 a
gallon. Diesel futures rose 1.02 cents, or 0.62%, to $1.6581 a
gallon.
--Jenny W. Hsu and Dan Molinski contributed to this article.
Write to Alison Sider at alison.sider@wsj.com and Neanda
Salvaterra at neanda.salvaterra@wsj.com
(END) Dow Jones Newswires
December 02, 2016 15:50 ET (20:50 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Goldman Sachs (NYSE:GS)
Historical Stock Chart
From Feb 2024 to Mar 2024
Goldman Sachs (NYSE:GS)
Historical Stock Chart
From Mar 2023 to Mar 2024