* November, December unsold volumes weighed on Nigeria’s, others crude differentials.
By Emeka Ugwuanyi
The Organisation of Petroleum Exporting Countries (OPEC) said the OPEC Reference Basket (ORB) fell by $6.86, or 7.5%, month-on-month in November to average $84.92/barrel.
The oil cartel in its November OPEC Monthly Oil Market Report (MOMR) stated that oil futures prices trended lower amid increased volatility, with the ICE Brent front-month contract dropping by $6.67, or 7.5%, m-o-m to $82.03/bbl, and the NYMEX WTI front-month contract dropping by $8.09, or 9.5%, to average $77.38/b. The DME Oman front-month contract dropped by $6.25, or 7.0%, m-o-m to settle at $83.06/bbl while the front-month ICE Brent/NYMEX WTI spread widened by $1.42 in November to average $4.65/bbl.
According to the report, the market structure weakened, with the front end of the ICE Brent and DME Oman futures forward curves flattening, while the nearest NYMEX WTI timespreads flipped into contango. Over the month, hedge funds and other money managers substantially reduced bullish positions, contributing to increased price volatility and exerting downward pressure on futures price.
“As 2023 draws to an end, the OPEC Secretariat remains cautiously optimistic about the fundamental factors affecting oil market dynamics in 2024. In response to the broad spectrum of uncertainties that continues to surround the global oil market, many countries participating in Declaration of Cooperation (DoC) announced in November 2023 additional voluntary adjustments in 1Q24 to help maintain stability and balance in global oil markets. Indeed, countries participating in DoC will continue on these commitments to achieve and sustain a stable oil market and provide long-term guidance for the market.
“West African crude differentials weakened in November on lacklustre demand from European and Asian buyers and ample availability of US light sweet crude oil. Unsold volumes for November and December loadings weighed on crude differentials.
“On a monthly average, Bonny Light, Forcados and Qua Iboe crude differentials to North Sea Dated declined by $2.73, $3.62 and $2.35, respectively, to stand at premiums of 52¢/bbl, $1.36/bbl and $1.06/bbl.
“The ORB value declined in November, dropping by $6.86/bbl, or 7.5%, to stand at $84.92/bbl, as all ORB component values decreased alongside their respective crude oil benchmarks. There were also lower crude differentials and official selling prices in all regions. On a yearly average, the ORB was down $18.61, or 18.3%, from $101.89/bbl in 2022 to an average of $83.28/bbl in 2023,” the Report added.
