REVIEW OF OIL PRICES 2016

• Date: 01 July 2017
• Published date: 01 July 2017
• DOI: http://doi.org/10.1111/oets.12007

First Quarter 2016

26 December-1 January

Thursday close: $36.61

Crude oil prices eased in thin trading

between the holidays. The bearish

tone that characterized the period

before Christmas continued after-

wards, though there was a slight

rally on the last trading day of the

year as traders covered short posi-

tions in advance of the holiday shut-

down. Fundamentals, including high

stock levels, suggested that there

were more price falls to come for

both crude and refined products.

2-8 January

Friday close: $31.67

Crude oil markets opened on an

upward note as traders returned to

their desks on Monday amid news

that Iran had reacted angrily to the

execution of a Shi'ite cleric over the

weekend. Protesters attacked the

Saudi embassy in Tehran, which

was followed by the severing of

diplomatic relations with Iran by

Riyadh. It soon dawned on traders

that the spat between the two coun-

tries was likely to have no effect on

removing excess production from

the market, and prices began to fall

again, helped downwards by falling

stock markets across the world, sug-

gesting a general lack of confidence

concerning global economic growth.

A rising US dollar and ever-growing

inventories completed the gloomy

picture and crude oil was down by

$5/bbl on the week by Friday.

9-15 January

Friday close: $28.80

Brent crude went below $30/bbl for

the first time in 12 years, falling as

low as $27.88 in futures trading

before rallying slightly. Other North

Sea crudes followed suit, taking

Dated down to $28.85/bbl at one

stage. Sweet crudes were hit by high

inventory levels. In sour markets the

price of Urals fell in relation to

North Sea Dated as a result of the

increasing availability of crude from

Iraq. Medium sweet and sour crudes

went down under pressure from high

middle distillate stocks on both sides

of the Atlantic. Despite the general

gloom amongst sellers about crude

oil prices, some grades improved

their position relative to the North

Sea benchmarks. Falling US produc-

tion and the prospect of rising US

exports of crude oil following the

ending of export restrictions by the

US Congress raised the price of

WTI to a 17¢ premium above Brent

after five years of almost continuous

trading at a discount to the UK

marker. Some of the lighter sweet

crudes and condensates from Africa,

South East Asia and Australasia also

improved relative to North Sea price

levels as a result of strong Asian

demand for gasoline. One US crude,

North Dakota Sour, made history by

having the misfortune to be quoted

at a negative level, when refiner,

Flint Hills Resources, posted a price

of minus 50 cents/bbl as the price it

was willing to pay for the crude.

16-22 January

Friday close: $30.46

A new note of bearishness was in-

troduced into global crude markets,

especially sour crude markets, with

the announcement that Iran had sat-

isfied the UN’s International Atomic

Energy Agency’s inspectors that it

had reduced the processing of urani-

um and shut down facilities that

could have been used to manufac-

ture nuclear weapons. As a result,

sanctions imposed by the EU on

trading with Iran were lifted along

with some, although not all, imposed

by the US. Iran said that the lifting

of sanctions would enable it to ex-

port an additional 500,000 bpd with-

in six months. Crude oil prices fell,

but rose at the end of the week on

news of possible financial stimulus

packages in both the EU and Japan.

23-29 January

Friday close: $33.14

Crude oil prices fell early in the

week as traders began to fret about

the prospects of additional exports

from Iran, but rallied after Iraq’s Oil

Minister hinted at a possible cut in

production by both Saudi Arabia and

Russia. Prospects appeared to im-

prove when the head of Transneft

said that talks between the two

countries were imminent. A rise in

major world stock markets added to

the general mood of bullishness.

30 January-5 February

Friday close: $32.35

Crude oil prices eased as demand for

many grades fell. Some sellers of

North Sea crude sought markets in

Asia in lieu of refineries in Europe,

where demand was slack, especially

for light, sweet crudes owing to

weak naphtha demand. West African

barrels similarly were offered to

buyers east of Suez. Rising Russian

exports caused prices of Urals to

weaken in Europe. Sour crudes re-

mained strong in Asia, however,

with good demand for most Persian

Gulf grades. Products were in plenti-

ful supply across most markets.

Demand for naphtha and heavy fuel

oil was down.

6-12 February

Friday close: $31.80

Prices fell further as markets reas-

serted themselves, as demand re-

mained lacklustre and supplies

abundant. Stock levels continued to

rise. Europe was affected by the

imbalance between demand and

supply as refiners shied away from

sweet crudes just as increasing vol-

umes became available from the

North Sea. Light, sweet African

blends fell for the same reason. In

the US, falling shale oil production

reduced the supply of North Dako-

ta’s Bakken crude, which rose

against WTI as a result. Sour crudes

generally fared better, especially

east of Suez where fuel oil began to

REVIEW OF OIL PRICES 2016

Oil and Energy Trends: Annual Statistical Review

© John Wiley & Sons Ltd 2017

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