November 2017 Monthly Average Crude Oil Price

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The monthly average U.S.-dollar price of West Texas Intermediate (WTI) crude oil moved higher for a fifth consecutive month in November, increasing by $5.06 (+9.8%), to $56.64 per barrel. The advance coincided with a marginally stronger U.S. dollar, the lagged impacts of a 580,000 barrel-per-day (BPD) drop in the amount of oil supplied/demanded during September (to 19.6 million BPD), and a further decline in accumulated oil stocks (to 448 million barrels). 

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“The long-discussed decision by OPEC and its collaborators on whether to extend their production freeze to the end of 2018 came last week and to nobody's surprise was unanimous,” wrote ASPO-USA’s Peak Oil Review Editor Tom Whipple. "After three months of hype, hints, rumors, and speculation, and a nearly $10 a barrel increase in oil prices, the matter is settled for another year. When the oil markets concluded there would be no immediate sell-off in reaction to the three-month price increases, oil futures started rising again. On Friday afternoon, increasing political turmoil surrounding the Trump administration and its relations with Russia roiled the market leaving New York futures at $58.35 and London at $64.10.

“Attention is turning to where prices are likely to go in the coming year. Here there is mixed opinion with some seeing oil prices climbing into the $70s as the global oil markets continue to tighten and there is no longer a threat of a sudden surge in oil production. Fear of increased geopolitical turmoil in the Middle East will continue to contribute to higher prices. Others argue that prices will fall in the next six months as winter demand falls and US shale oil production increases in the second quarter.”  

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Oilprice.com Editor Tom Kool also highlighted the OPEC output-cut extension: “The deal will run from January through to December, and the exact volumes of the production cuts will be the same as this year. The OPEC/non-OPEC coalition said that they would monitor market conditions and would remain ‘agile,’ ready to respond if the fundamentals deviate significantly from expectations. They will revisit the agreement at the next official meeting in June 2018, but they assume the cuts will last through the end of the year. Russian officials pressed for details on an exit strategy heading into the meeting, but the group offered no information - Saudi oil minister Khalid al-Falih said it would be ‘premature’ to do so. One notable change is that Libya and Nigeria agreed to cap their production levels at their 2017 average, which doesn't necessarily curtail supply but will prevent any 'surprise,' as witnessed this year. The Russian and Saudi oil ministers played up their unity and boasted about their strong relationship. All smiles from Vienna.”

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.