Crude oil declined to its lowest settlement price of 2011 after Saudi Arabian Oil Minister Ali al-Naimi said OPEC will meet growing demand for crude. Gasoline, heating oil and ethanol also fell.
“Naimi’s comments should be very bearish for the market,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “It suggests that the Saudis aren’t interested in seeing higher prices and may put a lid on them.”
Saudi Arabia is the leading producer in the Organization of Petroleum Exporting Countries.
Crude oil for March delivery dropped $1.24, or 1.4 percent, to settle at $87.87 a barrel on the New York Mercantile Exchange. It was the lowest settlement price since Dec. 16. Futures have gained 18 percent in the past year.
West Texas Intermediate’s discount to Brent crude reached $8.74 a barrel, the most since February 2009. The average discount for the past five years is 4 cents.
Gasoline for February delivery dropped 4.57 cents, or 1.9 percent, to $2.4132 a gallon on the Nymex. The March gasoline crack spread narrowed 47 cents to $14.52 a barrel.
Heating oil for February delivery fell 3.15 cents, or 1.2 percent, to $2.6193 a gallon. The heating oil crack spread, based on March contracts, dropped 7 cents to $22.30 a barrel from the highest level in almost two years.
Denatured ethanol for February delivery slipped 1.2 cents, or 0.5 percent, to $2.32 a gallon on the Chicago Board of Trade. The price has gained 30 percent in the past year.
Refineries and Transport
Holly Corp. will shut a diesel hydrotreater on or after Feb. 4 for inspection and repairs at its Tulsa East refinery in Oklahoma, the company said in a letter to state regulators.
Canadian Natural Resources Ltd.’s Horizon oil-sands project remains under a stop-work order after Alberta government investigators moved a crane onto the site this weekend to examine parts of the upgrader, which was damaged in an explosion on Jan. 6.
LyondellBasell Industries NV said the 110,000-barrel-a-day fluid catalytic cracker at its Houston refinery was shut Jan. 21 for work expected to last until the end of March.
Chevron Corp. is preparing to restart a crude oil pipeline in Utah on or around Feb. 1, pending regulatory approval, Mickey Driver, a spokesman for the company, said in an e-mail.