MARKET WATCH: NYMEX holds above $50/bbl pending OPEC meeting outcome

May 22, 2017
The front-month contract for light, sweet crude oil on the New York Mercantile Exchange gained nearly $1 to settle above $50/bbl May 19 pending the outcome of a May 25 meeting of the Organization of Petroleum Exporting Countries in Vienna.

The front-month contract for light, sweet crude oil on the New York Mercantile Exchange gained nearly $1 to settle above $50/bbl May 19 pending the outcome of a May 25 meeting of the Organization of Petroleum Exporting Countries in Vienna.

Prices continued climbing May 22, pushing benchmark crude oil futures to their highest levels in more than a month. The Brent crude oil price for July approached $54/bbl before closing on May 22.

Saudi Energy Minister Kahlid al-Falih said May 21 that OPEC and some major non-OPEC producers want to extend production targets by 9 months. His statement confirmed earlier remarks that Saudi Arabia and Russia advocate an extension to Mar. 31, 2018.

“We believe that continuation with the same level of cuts, plus eventually adding one or two small producers…will be more than adequate to bring the 5-year balance,” to a desired level by second-quarter 2018, al-Falih told reporters at a news conference in Riyadh.

Analysts and traders largely expect OPEC and 11 non-OPEC producers, including Russia, to extend their agreement to collectively curb production. The existing agreement that took effect in January calls for production-cut targets of about 1.8 million b/d, of which OPEC accounts for 1.2 million b/d.

The closely watched Baker Hughes Inc. rig count, an indicator of future US production, jumped 16 units for the week ended May 19 to 901, up 497 since a bottom in recent data for the weeks ended May 20-27, 2016. The latest rig count reached its highest level since May 1, 2015 (OGJ Online, May 19, 2017).

Energy prices

The June light, sweet crude contract on NYMEX climbed 98¢ on May 19 to close at $50.33/bbl. The July contract rose $1.01 to settle at $50.67/bbl.

The natural gas price for June increased 7¢ to a rounded $3.26/MMbtu. The Henry Hub cash gas price was $2.59/MMbtu, down 54¢.

Heating oil for June gained nearly 4¢ to a rounded $1.58/gal. Reformulated gasoline stock for oxygenate blending for June gained 4.6¢ to a rounded $1.65/gal.

The Brent crude contract for July on London’s ICE gained $1.10 to $53.61/bbl. The August contract was up $1.09 to $53.76/bbl. The June gas oil contract was $473.75/tonne, up $8.75.

OPEC’s basket of crudes on May 19 settled at $50.87/bbl, up $1.

Contact Paula Dittrick at [email protected].