Crude Oil Price Movements
OPEC Monthly Oil Market Report – November 2017
Crude Oil Price Movements
The OPEC Reference Basket averaged $55.50/b in October, gaining $2.06 over the previous month and
reaching the highest value in more than two-and-a-half years, with a year-to-date average of $50.68/b.
Throughout the month, prices were supported by rising global demand and expectations that OPEC and
other participating non-OPEC producing countries would extend the agreement to adjust output and bring
forward the oil market rebalance. OPEC and participating non-OPEC countries’ production adjustment
conformity levels have remained over 100% for the first ten months into their 18-month agreement. The
physical crude oil market was also very strong over the month, particularly for the Middle East crudes.
Crude futures also reached levels not seen since mid-2015. ICE Brent ended $2.13 higher at $57.65/b,
while NYMEX WTI increased $1.72, reaching $51.59/b. Y-t-d, ICE Brent is $9.06, or 20.6% higher at
$53.04/b, while NYMEX WTI rose by $7.23, or 17.1%, to $49.60/b. The ICE Brent/NYMEX WTI spread
widened by 42¢ or 7.4% to $6.05/b, its widest since mid-2015, keeping US crude as the most attractive
grades for arbitrage into both Europe and Asia. Higher Cushing stocks hit WTI and pressured prices, while
Brent prices have been boosted by tighter supplies.
Hedge funds raised net long positions in NYMEX WTI futures and options by 29,456 contracts to
281,244 lots, the highest level since mid-April. In ICE Brent, money managers increased net long positions
in futures and options by 21,592 contracts to 530,237 lots, the highest ever recorded.
Brent and Dubai remained in backwardation, while WTI contango eased. The sweet/sour differentials in Asia
and Europe narrowed in all markets, amid tighter supplies and healthy demand for sour grades, while lighter
grades came under pressure from arbitrage flows from the US.
OPEC Reference Basket
Amid continuing bullish oil market fundamentals,
ORB monthly value
firmed above $55.50/b in
October to its highest in almost two-and-a-half
years. Throughout the month, prices have been
bolstered by rising global demand and expectations
that OPEC and other producing countries would
extend a deal to adjust output. The ORB increased
for the fourth consecutive month, improving by
almost 4% to remain above the key $50/b, y-t-d.
Oil prices persisted in October as the ongoing
bullish market sentiment due to improving market
fundamentals, was fuelled further by indications
from key OPEC Members, Russia and other
exporters that they support extending the 1.8 mb/d
production adjustment to rebalance the oil market.
OPEC and the participating non-OPEC countries’
production adjustment conformity level remains
over 100% for ten months into the 18-month
Graph 1 - 1: Crude oil price movement
agreement. The potential return of a geopolitical premium in the Middle East is also seen to support prices.
Moreover, US crude stocks have continued to fall over the month as imports fell and exports surged, bringing
the cumulative US crude stock draw to just under 10 mb in October. The draws are particularly impressive
when compared with seasonal norms that show the five-year average US crude stock build for October at
16 mb and last year’s monthly build at 19.7 mb.
rose $2.06, or 3.9%, to settle at $55.50/b on a monthly average. Compared to the
previous year, the ORB value was 28%, or $11.23 higher, at $50.68/b.
Sources: Argus Media, OPEC Secretariat and Platts.