The light, sweet crude oil price for June delivery rose modestly to close above $46/bbl on the New York market May 8 while the Brent crude oil contract for July also rose slightly to close above $49/bbl on what analysts called rising confidence that major producers likely will extend production-cut targets.
The Organization of Petroleum Exporting Countries and other major producers, including Russia, agreed to cut production by 1.8 million b/d for 6 months starting in January. OPEC is scheduled to meet May 25 in Vienna to consider extending the targets.
Saudi Arabia’s Energy Minister Kalid al-Falih said May 8 that he believes the production-cut targets could be extended into 2018.
“Given recent increases in US production, markets are likely to take comfort from an agreement that lasts long enough to allow the market to move towards balance and reduce inventory,” Ric Spooner, a chief market analyst at CMC Markets, told the Wall Street Journal.
Ole Hansen, chief of commodity strategy, noted that the US benchmark is staying below $47/bbl while Brent crude oil prices stay below $50/bbl. He said traders and analysts are hoping to see inventory statistics showing a reduction in world crude oil supplies.
“While OPEC is trying to cut production, Libyan output is at its highest level since October 2014, and US shale oil has added 800,000 bbl to the market,” Hansen said.
Energy prices
The light, sweet contract for June crude oil delivery gained 21¢ to close at $46.43/bbl on the New York Mercantile Exchange on May 8. The July contract also rose 24¢ to $46.84/bbl.
The natural gas price for June was down 9¢ to a rounded $3.17/MMbtu. The Henry Hub cash gas price dropped to $3.03/MMbtu on May 8, down 4¢.
Heating oil for June rose 1.9¢ to $1.45/gal. Reformulated gasoline stock for oxygenate blending for June gained 1.3¢ to a rounded $1.52/gal.
The Brent crude contract for July on London’s ICE was up 24¢ to settle at $49.34/bbl. The August contract increased 27¢ to $49.75/bbl. The May gas oil contract dropped $3.75 to $430/tonne.
OPEC’s basket of crudes was $46.87/bbl on May 8, up 31¢.
Contact Paula Dittrick at [email protected].