Light, sweet crude oil for March delivery on the New York market gained modestly to settle above $66/bbl on Jan. 26 but retreated in early Jan. 29 trading as market participants considered a climbing US rig count.
Baker Hughes reported the US drilling rig count gained 11 units to 947 rigs working during the week ended Jan. 26 compared with the previous week (OGJ Online, Jan. 26, 2018).
Higher oil prices starting out 2018 could result in more US shale production, limiting future US oil price gains.
“There is a strong pick up in rigs, particularly in the Permian region, indicating somewhat of a cap on oil prices,” said Giovanni Staunovo, UBS Wealth Management analyst.
Both US and Brent oil benchmark prices reached 3-year highs earlier this month on strong crude demand, declining Venezuela production, a weakening US dollar, and the Organization of Petroleum Exporting Countries and other major producers trying to reduce world oil supply.
US natural gas futures rose Jan. 26 on forecasts for intense cold temperatures across the Midwest down to Texas and eastward. Analysts said gas storage was tight in the southern and eastern US where temperatures are expected to plunge again in early February.
Natural gas in underground storage across the Lower 48 states was 17.5% below the 5-year average, after another big withdrawal from inventories last week, the US Energy Information Administration said.
Working gas in storage was 2.296 tcf as of Jan. 19, a net decrease of 288 bcf from the previous week. Stored gas levels were 519 bcf less than last year at this time and 486 bcf below the 5-year average of 2,782 bcf, EIA’s Weekly Gas Storage Report said.
Energy prices
The March light, sweet crude contract on the New York Mercantile Exchange climbed 63¢ on Jan. 26 to settle at $66.14/bbl. The April contract increased 60¢ to $65.97/bbl.
The NYMEX natural gas price for February gained nearly 6¢ to $3.50/MMbtu. The Henry Hub cash gas price dropped 5¢ to $3.52/MMbtu.
Ultralow-sulfur diesel for February gained 2¢ to a rounded $2.14/gal. The NYMEX reformulated gasoline blendstock for February increased 2¢ to a rounded $1.94/gal.
Brent on London’s ICE for March rose 10¢ to $70.52/bbl. The April contract was up 18¢ to $70.15/bbl. The gas oil contract for February reached $628.50/tonne, up $1.25.
OPEC’s basket of crudes was $67.94/bbl on Jan. 26, down 52¢.
Contact Paula Dittrick at [email protected].
