The light, sweet crude oil prices for May delivery fell modestly on the New York market Apr. 20 but settled above $50/bbl while Brent crude oil for June delivery gained slightly to settle at nearly $53/bbl on the London market.
The market stabilized after dropping nearly $2/bbl for both benchmarks on Apr 19 after the US Energy Information Administration reported an unexpected build in gasoline supplies.
Saudi Arabia Energy Minister Kalid al-Falih said some members of the Organization of Petroleum Exporting Countries have reached a tentative agreement to cut more production. In January, OPEC started its production-cut targets of 1.2 million b/d.
Speaking during an Energy Forum in Abu Dhabi on Apr. 20, al-Falih suggested production cuts by OPEC members and non-OPEC producers will need to be extended to support oil prices. Non-OPEC producers in December 2016 agreed to cut 558,000 b/d of which Russia agreed to cut 300,000 b/d.
“There is an initial agreement, but it has not been communicated to all the countries yet that we might be forced to extend in order to reach our goal,” al-Falih said. But he did not provide any details on length of the extension, the number of participating countries, or the production volumes being discussed.
OPEC will decide in May whether to formally extend production-cut targets into this year’s second half.
Commerzbank issued a research note saying, “The foremost goal of the OPEC agreement—namely to reduce the huge stocks of crude oil and oil products—is still a long way from being achieved.”
Energy prices
The May crude oil contract on the New York Mercantile Exchange dropped 17¢ on Apr. 21 to close at $50.27/bbl. The June contract decreased 14¢ to $50.71/bbl.
The natural gas price for May fell 2.6¢ to a rounded $3.16/MMbtu. The Henry Hub cash gas price was down 2¢ to $3.10/MMbtu.
Heating oil for May fell less than a penny to remain at a rounded $1.58/gal. Reformulated gasoline stock for oxygenate blending for May gained 1¢ to a rounded $1.67/gal.
The Brent crude contract for June on London’s ICE gained 6¢ to settle at $52.99/bbl. The July contract was up 3¢ to $53.46/bbl. The May gas oil contract declined $11 to $476.75/tonne.
OPEC’s basket of crudes closed Apr. 20 at $50.48/bbl, down $1.40.
Contact Paula Dittrick at [email protected].
