MARKET WATCH: Crude oil prices mixed on global geopolitical concerns

Crude oil futures prices rose on the New York market May 19 while benchmark Brent crude oil prices declined on the London market. Analysts said the market was getting mixed signals based on robust US oil supplies and also on geopolitical uncertainty in Ukraine and Libya.

Germany’s government officials suggested Russia would face additional sanctions if Moscow disrupts Ukraine’s upcoming presidential election scheduled for May 25.

In Libya, a dispute intensified between various militias. Islamist-led militias were deployed to Tripoli May 20.

Barclays Capital Inc. analyst Miswin Mahesh said the Organization of Petroleum Exporting Countries might be required to produce about 600,000 b/d more of crude oil during this year’s second half vs. the first half.

But about 2.5 million b/d of OPEC crude oil supply from countries like Libya, Iran, and Iraq is shut and if any of this oil output restarts, other OPEC members would have to cut their oil exports, Mahesh said.

“The method with which members discuss this openly and show resolve will also provide a good litmus test for how the group will together deal with accommodating non-OPEC supply growth in the coming years,” he said.

Energy prices

The New York Mercantile Exchange June crude oil contract price gained 59¢ on May 19, closing at $102.61/bbl. The July contract rose 53¢ to $102.11/bbl.

The June natural gas contract was up 5.7¢ to $4.47/MMbtu. Analysts noted that updated weather forecasts called for mild temperatures across much of the Midwest and Northeast, which would likely mean lower heating demand.

Heating oil for June delivery lost 1.27¢ to settle at a rounded $2.94/gal. Reformulated gasoline stock for oxygenate blending for June delivery edged down just shy of a penny to a rounded $2.96/gal.

In London, the July ICE contract for Brent crude delivery was down 38¢, closing at $109.37/bbl. The August contract declined 35¢ to settle at $108.59/bbl. The ICE gas oil contract for June relinquished $4 to $912.25/tonne.

The Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes on May 19 was $106.43/bbl, rising 48¢.

Contact Paula Dittrick at paulad@ogjonline.com.

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