Light, sweet crude oil prices fell modestly on the New York market Feb. 2. Rhetoric about US-Iran tensions appears to be outweighed by high US oil inventories and rising US production. Baker Hughes Inc. was scheduled to release its weekly rig count Feb. 3.
After having rallied more than $1/bbl on Feb. 1, US oil futures dropped Feb. 2 but stayed within a recent tight trading range of $50-55/bbl. Oil prices climbed again in early Feb. 3 trading.
Oil traders monitored possibly escalating tensions between Iran and US President Donald Trump’s administration. National Security Adviser Mike Flynn and Trump said Iran was “on notice” following its ballistic missile test.
James William, WTRG Economics economist, called the warning a “non-event in the oil market.” He said a threat of stricter financial sanctions involving European cooperation would have more influence on oil prices.
Citi Futures analyst Tim Evans said in a research note Feb. 2 that market participants concluded that the dispute “represents more of a war of words than the start of a military confrontation.”
Trump previously has criticized the 2016 implementation of an international agreement with Iran that lifted nuclear-related sanctions.
Separately, prices for US natural gas futures ended modestly higher. The Energy Information Administration said gas in underground storage across the Lower 48 fell 87 bcf to 2.7 tcf for the week ended Jan. 27.
The Weekly Gas Storage Report estimated current gas storage was 266 bcf below the level reported for the same period last year. The current 2.7 tcf estimate is still 59 bcf above the 5-year average, EIA said.
Energy prices
The New York Mercantile Exchange crude oil contract for March delivery declined 34¢ on Feb. 2 to $53.54/bbl. The April contract was down 32¢ to $54.17/bbl.
US natural gas futures for March delivery gained nearly 2¢ to a rounded $3.19/MMbtu. Gas spot prices at the Henry Hub in Cushing, Okla., dropped 2¢ to $3.10/MMbtu.
Heating oil for March fell 2¢ to a rounded $1.65/gal. Reformulated gasoline stock for oxygenate blending for March fell 4.6¢ to a rounded $1.53/gal.
The Brent crude contract for April on London’s ICE decreased 24¢ to $56.56/bbl. The Brent May contract was down 27¢ to $56.85/bbl. Gas oil for February closed at $500.75/tonne, up $2.50.
The average price for Organization of Petroleum Exporting Countries’ basket of benchmark crudes on Feb. 2 was $53.92/bbl, up $1.16.
Contact Paula Dittrick at [email protected].