Light, sweet crude oil for June delivery settled up a penny on the New York market May 12 but the near-month contract failed to close at or above $48/bbl any day last week after having dipped to close below $46/bbl on May 9.
Oil prices rose May 15 in early trading following comments from Saudi Energy Minister Khalid al-Falih and Russian Energy Minister Alexander Novak that production-cut targets should be extended into 2018.
In January, the Organization of Petroleum Exporting Countries and some non-OPEC producers, including Russia, implemented cuts of 1.8 million b/d in efforts to support oil prices.
OPEC is expected to consider the production targets at its May 25 meeting in Vienna. Al-Falih and Novak suggest extending the targets to Mar. 31, 2018.
Commerzbank analysts recently noted, “Extending the cuts until March 2018 would take account of the fact that demand in the first quarter of a year is lowest for seasonal reasons.”
Separately, Wood Mackenzie Ltd. said that a survey of its clients shows the industry remains cautious regarding short-term oil prices.
Martin Kelly, WoodMac head of corporate analysis, said 80% of survey participants believe, “Oil prices will be in the $50-60/bbl range this year, while 75% think it will be in the $60-80/bbl range in 2020, which, if correct, will generate significant free cash flow for the industry.”
Meanwhile, US natural gas prices have been rising. J. Marshall Adkins, analyst with Raymond James & Associates, said the natural gas market continues to tighten going into the summer gas-storage injection season.
Total gas in underground storage across the Lower 48 was at 2.3 tcf for the week ended May 5, which was 369 bcf less than the same time last year, the US Energy Information Administration reported in the Weekly Natural Gas Storage Report.
“Fundamentally speaking, 2017 should prove to be a positive year for natural gas prices as demand will be pushed by exports of gas to Mexico and a continued ramp up of LNG exports, while supply should see some effects of lower imports from Canada,” Adkins said.
Energy prices
The light, sweet contract for June crude oil delivery gained 1¢ to close at $47.84/bbl on the New York Mercantile Exchange May 12. The contract for July, meanwhile, dropped 3¢ to settle at $48.17/bbl.
The natural gas price for June was up nearly 5¢ to a rounded $3.42/MMbtu. The Henry Hub cash gas price gained 5¢ to $3.25/MMbtu on May 12.
Heating oil for June increased less than 1¢ to remain at a rounded $1.49/gal. Reformulated gasoline stock for oxygenate blending for June gained 1.4¢ to a rounded $1.58/gal.
The Brent crude contract for July on London’s ICE was up 7¢ to settle at $50.84/bbl. The August contract held steady at $51.05/bbl. The June gas oil contract was $448.75/tonne, down 25¢.
OPEC’s basket of crudes was $48.27/bbl on May 12, up 10¢.
Contact Paula Dittrick at [email protected].