EDITORIAL: Oil Price Review

• Published date: 01 January 2018
• DOI: http://doi.org/10.1111/oet.12549
• Date: 01 January 2018

OIL PRICE REVIEW

Fourth Quarter 2017

Dated Brent crude 29 September close: $57.02 per barrel

30 September-6 October Friday close: $55.50

Crude oil prices fell early in the week as output showed

signsofrecoveringintheUSandLibya.Demand,on

the other hand, was robust, especially in markets east

ofSuez,wheredemandformiddledistillatewaspar-

ticularly rm, which helped the prices of several Asian

and Australian medium sweet grades, such as Vietnam’s

Ruby.Someofthelightergradeswerealsoinhigh

demand, including Australia’s Cossack, on rising ren-

ery demand for naphtha. European renerswanted light

crudes with good straight-run yields of gas oil and kero-

sine,whichsentanumberofrenerstotheCaspian

for their crudes. Sour crude prices were mixed: Urals

gained relatively in the Mediterranean on a shortfall

in supplies; Iraqi cru des lost ground for the opp osite

reason.

7-13 October Thursday close: $56.86

ere was a small rally in crude prices, driven by a

few bullish news items rather than by any fundamental

change in market conditions. A claim by OPEC early

in the week that its cuts in production were draining

global crude stocks turned out to be worth abouta dollar

on the price of crude. Further gains came from r umors

of an imminent Iraqi attack on Kurdish forces in the

area around the Kirkuk oileld. A number of traders

decidedtobanktheirgainsatthispointandfutures

fell in London and New York, only to rise again when

US President, Donald Trump, referred to Iran during a

speechonUSsanctionspolicy.

14-20 October Friday close: $57.89

ere was more market excitement at the start of

the week when Iraqi government troops took back

the Kirkuk oileld complex from Kurdish Peshmerga

forces. Baghdad decided that Kirkuk would no longer be

exported via the Turkish Mediterranean port of Ceyhan

by means of the export pipeline owned by the Kurdistan

Regional Council (KRG). e initial reaction to the loss

of about 280,000 bpd of Kirkuk crude was to mark-up

prices in the Mediterranean but sellers found few buyers

thanks to the availability of other nearby crudes from

Libya and the Caspian, together with an inux of light,

sweet crude from the US, such that the price of Azeri

Light dropped to a three-month low against North Sea

Dated, of which there was a plentiful supply. ere was

nevertheless just enough nervousness about the future

of both Iraqi and Kurdish exports to ensure that prices

closed out the week on a positive note.

21-27 October Friday close: $60.15

Demand for prompt crude in Asia and some strong

product prices ensured that crude oil prices went on

rising until, on Fri day,Brent prompt-mont h futures went

above $60 for the rst time since June 2015, closing

the week at $60.44/bbl. Asia’s high demand for prompt

sour barrels was a response to low prices for Dubai

intheoutermonths.erewasabrisktradeinboth

sour and sweet prompt crude, which helped the price

of Persian Gulf grades and Russia’s ESPO and Sokol

blends, which are lied from Terminals in Russia’s Far

East. Political support for higher prices was provided by

Saudi Arabia’s Crown Prince Muhammad bin Salman,

who pronounced his support for an extension of the

production cuts agree d by OPEC and its non-OPEC

allies.

28 October-3 November Friday close: $61.42

e Saudis got the week o to a good start (for sellers) by

reiterating their support for an extension of the produc-

tion deal and some covering of short positions in Brent

helped the December contract above $61/bbl on the last

trading day.WTI lagged b ehindBrent, which pushed the

dierentialoutto$7/bblbeforeBrenteasedbackalittle,

cutting the premium to the US crude by nearly a dollar.

Strong gasoline pri ces helped to underpin the price of

light, sweet crudes, while sour grades beneted from ris-

ing middle distillate values in Asia, as Dubai was talked

nearly $2 higher.

4-10 November Friday close: $64.35

High naphtha prices east of Suez prompte d a buying

spreeofsuitablecrudesincludingKazakhstan’sCPC

Blend, which was also in demand in the Mediterranean.

AnoteoftensionintheMiddleEastarisingfroma

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