The light, sweet crude oil price rose by $1.55 on July 25, settling at its highest since June 6, and the Brent crude oil price gained $1.60 to settle above $50/bbl pending the weekly US government oil and product inventory report.
The American Petroleum Institute on July 25 estimated US crude oil supplies dropped by 10.2 million bbl for the week ended July 21.
The US Energy Information Administration was scheduled to release its own estimate on July 26.
Eugen Weinberg, Commerzbank head of commodity research, said he considers the oil price bump to be short-term trend.
“It doesn’t change much in the longer-term situation of the market,” Weinberg said. “The market is going to be over-supplied.”
Andrew Slaughter, executive director for the Deloitte Center for Energy Solutions, said the oil price recovery stemming from production-cut targets by an alliance of the Organization of Petroleum Exporting Countries and some non-OPEC producers “seemed to have run out of steam since early June when crude prices settled back into the mid-$40/bbl range.”
Slaughter noted world crude oil inventories remain high because some output cuts were offset by higher US production and by rising production from Libya and Nigeria, which were exempted from the OPEC production-cut targets.
“There have also been signs that compliance with the OPEC, non-OPEC agreement might be slipping,” said Slaughter. He called the Russia meeting of the market monitoring committee “a useful check point.”
During that meeting, Nigeria agreed to set a cap of 1.8 million b/d on its production. Saudi Arabia said it will limit exports to 6.6 million b/d in August (OGJ Online, July 24, 2017).
Saudi Arabia also said it will monitor export levels of other OPEC members.
Energy prices
The September light, sweet crude contract on NYMEX gained $1.55 on July 25 to settle at $47.89/bbl. The October contract also added $1.51 to close at $48.02/bbl.
The NYMEX natural gas price for August increased 4.5¢ to a rounded $2.94/MMbtu. The Henry Hub cash gas price held steady at $2.96/MMbtu.
Heating oil for August gained 5¢ to a rounded $1.57/gal. Reformulated gasoline stock for oxygenate blending for August rose nearly 4¢ to remain at a rounded $1.60/gal.
The Brent crude contract for September on London’s ICE gained $1.60 to $50.20/bbl. The October contract was up $1.54 to $50.36/bbl.
The August gas oil contract gained $10.25 to $461.75/tonne. OPEC’s basket of crudes on July 25 was $47.11/bbl, up $1.10.
Contact Paula Dittrick at [email protected].
