NEW YORK--(BUSINESS WIRE)--Crude oil prices continued falling Wednesday amid OPEC's 1 million
barrel production cut, though OPEC's largest member, Saudi Arabia, is
continuing to pump oil which traders say will add to global inventories.
Crude oil for November delivery fell 42 cents per barrel Wednesday in
early afternoon trading in New York to reach $58.10 a barrel.
In London, Brent crude oil for November delivery closed down $1.16 at
$60.30 Tuesday.
Heating oil futures for November delivery on the NYMEX were flat today
at $1.68 per gallon. Tuesday, the Department of Energy said that home
heating costs would be lower for American consumers this winter due to
higher inventory levels and lower crude oil prices.
Unleaded gasoline traded at $1.47 per gallon for November delivery in
New York Wednesday. Gasoline prices nationwide have declined 5 cents a
gallon at the pump in the last week, marking the ninth consecutive week
of declining gasoline prices.
OPEC's basket price of 11 crudes closed down 39 cents a barrel at $55.31
Tuesday. The Organization of Petroleum Exporting Countries said it was
reducing daily oil production by 1 million barrels due to higher than
needed global stockpiles. Only Saudi Arabia, OPEC's largest producer, is
continuing to pump crude oil at its existing level despite its
assurances that it would cut production levels. OPEC produces 40 percent
of the world's oil supply.
Non-OPEC production has been rising and is the reason global supplies
have gone up. Russia has expanded its oil production and now surpasses
Saudi Arabia as the world's largest crude oil producer. In Canada,
ConocoPhillips and EnCana Corp., Canada's largest producer, said they
will spend $10.7 billion over the next decade to boost Canada's oil
production and deepen its access to the U.S. market.
The companies aim to increase the output of crude oil from two of
EnCana's projects in Alberta's oil sands and expand the capacity of two
of ConocoPhillips' U.S. refineries to process the crude.
Canada is already the largest exporter of crude oil to the U.S.
But EnCana isn't alone in its push to develop Alberta's oil sands.
Junior oil and gas exploration company Patch International, Inc. (OTCBB:
PTCH) announced in early August that it's sitting on 23 to 50 million
barrels of oil across all its lease sections. The company said recently
that two Alberta wells it's participating in were successful and last
week said it was commencing 3D seismic operations at another of its
Alberta locations.
While major oil companies move to up both Canadian production and
refining, it's the smaller juniors who make up the bulk of supplies.
During the boom in Alberta's oil sands leasing program early this year
companies like Patch were able to get in early enough to win out on some
of the better properties, as evidenced by its independent engineers
report. But as oil came off its peak price range this summer, the
juniors saw their share prices hit dramatically compared to their larger
piers. Joint ventures like EnCana and ConocoPhillips should once more
add to Canada's ability to supply more oil to the U.S. but it will be
the juniors like Patch who may benefit the most once those refineries
gear up to handle Alberta's thick oil sands material.
