Light, sweet crude oil prices for March delivery settled at $53/bbl on the New York market Feb. 9, up 66¢ for the trading session. It was the highest settlement price since Feb. 6 as the front-month contract has hovered in the $52-53/bbl range all week so far.
Reuters reported that Goldman Sachs said high fuel inventories and increasing US production indicate that world oil markets could remain oversupplied for some time even as crude inventories gradually drain because some major producers elsewhere cut production.
“We do not view the recent excess US builds as derailing our forecast for a gradual draw in inventories, with in fact the rest of the world already showing signs of tightness,” Goldman Sachs said in a research note, noting that US unconventional oil production is rising again.
Bakers Hughes Inc. was scheduled Feb. 10 to release its weekly US rotary rig count. The US Energy Information Administration estimates domestic production rose to 8.98 million b/d for the week ended Feb. 3, marking the highest level since April.
The Organization of Petroleum Exporting Countries along with some non-OPEC producers agreed to cut their cumulative production by 1.8 million b/d. Those cuts started in January. Nigeria and Libya were exempted from the OPEC production cuts.
Libya is working to restore production as it repairs damaged oil fields and ports following a 2011 revolution. Nigeria’s oil production also fell in recent years with repeated attacks to its production equipment and pipelines.
BMI Research said production from Nigeria and Libya increased a combined 200,000 b/d in January. BMI Research analysts believe another 500,000 b/d capacity could be brought online in 6 months.
BNP Paribas expects oil supply will rise year-on-year during this year’s first half in large non-OPEC producers such as Canada, Brazil, and Kazakhstan.
“The key question is the extent of the renaissance of the US shale oil sector, given a continual rise in the rig activity since May 2016,” BNP Paribas analysts said in a research note.
Energy prices
The NYMEX crude oil contract for March delivery gained 66¢ on Feb. 9 to $53/bbl. The April contract was up 55¢ to $53.46/bbl.
US natural gas futures for March delivery gained 1.5¢ to a rounded $3.14/MMbtu. The spot gas price at the Henry Hub in Cushing, Okla., gained 5¢ to $3.10/MMbtu.
Heating oil for March edged up less than a penny to a rounded $1.64/gal. Reformulated gasoline stock for oxygenate blending for March gained nearly 2¢ to a rounded $1.57/gal.
The Brent crude contract for April on London’s ICE was up 5¢ to $55.63/bbl. The Brent May contract gained 53¢ to $56/bbl. Gas oil for March closed at $494.50/tonne.
The average price for OPEC’s basket of benchmark crudes on Feb. 8 was $52.76/bbl, up 63¢.
Contact Paula Dittrick at [email protected].
