US light, sweet crude oil prices for March delivery fell during Feb. 20 trading and settled above $50/bbl on the New York market. Some analysts suggested ample worldwide oil supplies could push prices below that level in coming weeks.
“While the market has been focused on falling exploration and capital spending, strong supply growth is still emerging,” ANZ Research said. “This can’t be ignored forever.”
ANZ Research forecast that US, light sweet crude will slip back below $50/bbl and could dip to $43/bbl during the next 2-3 months, the Wall Street Journal reported Feb. 23.
Crude oil futures prices had rebounded in recent weeks on big drops in the weekly US rig count but Baker Hughes Inc. on Feb. 20 reported a weekly decline of 48 rigs, which was markedly fewer than the number reported for the previous week (OGJ Online, Feb. 20, 2014).
Wood Mackenzie Ltd. forecasts a continued decline in land rigs, leveling at 1,000 units by August.
Underlying the rig count forecast is WoodMac’s outlook for oil prices to recover during the year from the lows seen in early 2015, with an annual average of $53.25/bbl for West Texas Intermediate.
However, if WTI prices were to hover in the $40–50/bbl range, then the rig count decline will be more severe, said WoodMac, whose forecast calls for oil prices to average of $64/bbl for 2016.
A weekly report from Morgan Stanley analysts said US crude stocks appear set to continue building through May.
“Volatility should be the new normal, but price upside is likely limited from here,” Morgan Stanley said.
The Energy Information Administration said US commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, increased by 7.7 million bbl for the week ended Feb. 13. The estimated total of 425.6 million bbl, the Petroleum Status Report showed.
Energy prices
The New York Mercantile Exchange March crude oil contract dropped 82¢ to $50.34/bbl Feb. 20 while the April contract declined $1.02 to $50.81/bbl. The March contract expired with the end of Feb. 20 trading.
The natural gas contract on NYMEX for March rose 11.7¢ to a rounded $2.95/MMbtu. The Henry Hub, La., gas price was $2.98/MMbtu on Feb. 20, up 1¢.
Heating oil for March climbed 11.8¢ to a rounded $2.11/gal. Reformulated gasoline stock for oxygenate blending for March delivery rose 2.4¢ to a rounded $1.64/gal.
The April ICE contract for Brent crude oil edged up 1¢, settling at $60.22/bbl. The May contract was down 13¢ to $60.77/bbl. The ICE gas oil contract for March gained $13.25 to $581.50/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes on Feb. 20 was $56.55/bbl, up 26¢.
Contact Paula Dittrick at [email protected].
*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.
