Light, sweet crude oil prices settled slightly above $45.50/bbl on the New York market July 6 after a weekly government report showed US oil supplies fell 6.3 million bbl for the week ended June 30.
The US oil benchmark continued its recent volatile pattern the next day, falling in early July 7 trading.
The single-day rally came after the US Energy Information Administration estimated crude oil inventories, excluding the Strategic Petroleum Reserve, at 502.9 million bbl. EIA said that level put crude inventories in the upper half of the average range for this time of year. (OGJ Online, July 6, 2017).
Analysts surveyed by the Wall Street Journal before the inventory’s release had forecast US oil supplies would fall 2.5 million bbl.
Ole Hansen, head of commodity strategy for Saxo Bank, said, “Big oil swings show not only that the third-quarter bull-bear fight is heating up, but also that the summer holiday is beginning to impact liquidity, thereby raising the risk of larger price swings.”
US oil production increased 88,000 b/d to 9.338 million b/d for the week ended June 30, according to EIA’s Petroleum Status Report. Production across the Lower 48 was up 105,000 b/d to 8.915 million b/d. Alaska’s production was 423,000 b/d, down 17,000 b/d from the previous week.
On world oil markets, Saudi Aramco set record production in 2016 before the Organization of Petroleum Exporting Countries and major non-OPEC producers negotiated production-cut targets to counter world oil oversupply.
Aramco’s production averaged 10.5 million b/d in 2016 compared with 10.2 million b/d in 2015, according to an annual review published July 6 on its web site.
Hansen said, “The price of Brent crude oil is likely to rally back towards $55/bbl during the coming months before renewed weakness sets in as the focus turns to 2018 and the potential risk of additional barrels hitting the market if OPEC and Russia fail to extend the production cut deal beyond first-quarter 2018.”
Energy prices
The August light, sweet crude contract on NYMEX gained 39¢ on July 6 to settle at $45.52/bbl. The September contract was up 36¢ to close at $45.70/bbl.
The NYMEX natural gas price for August climbed nearly 5¢ to a rounded $2.89/MMbtu. The Henry Hub cash gas price was $2.88/MMbtu, down 2¢.
Heating oil futures for August edged up less than a penny to remain at a rounded $1.48/gal. Reformulated gasoline stock for oxygenate blending for August increased 2.6¢ to a rounded $1.53/gal.
The Brent crude contract for September on London’s ICE gained 32¢ to $48.11/bbl while the October contract was up 32¢ to $48.39/bbl. The July gas oil contract was up $3.75 to $446/tonne.
OPEC’s basket of crudes on July 6 was $46.52, down 52¢.
Contact Paula Dittrick at [email protected].