The April ICE contract for Brent crude oil prices rose modestly in London to settle above $62/bbl on Feb. 16 while the New York Mercantile Exchange was closed for Presidents Day so no settlement prices were available for US energy commodities.
Brent rose 68¢, settling at $62.20/bbl. The global benchmark for crude oil has gained during the last 3 weeks after dropping to $45.19/bbl on Jan. 13, the lowest in almost 6 years and down from $115/bbl during June 2014.
“The gains come at an odd time,” JBC Energy said in a research note. “Crude oil balances suggest that the crude oversupply is only set to reach its peak in April, and US production continues to grow despite all the talk of spending cuts and lower rig counts.”
The ICE gas oil contract for March climbed $6.50 to $590/tonne. The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes on Feb. 13 was $56.43/bbl, up 46¢ from Feb. 13.
Meanwhile, talks stalled among European finance ministers on Feb. 16, preventing a new financing agreement for Greece, increasing economic uncertainty, and weakening the euro.
International Energy Agency Chief Economist Fatih Birol said the rise of the Islamic State in Iraq and Syria could discourage investors from spending the amounts believed necessary to prevent an oil shortage in the next decade.
“The appetite for investments in the Middle East is close to zero, mainly as a result of the unpredictability of the region,” Birol told Reuters news service. On Feb. 16, Egypt bombed Islamic State targets in Libya.
Meanwhile, analysts covering US light, sweet crude oil markets await the weekly Energy Information Administration’s inventory report, which will be released on Feb. 19 because of the Feb. 16 Presidents Day holiday.
Barclays analyst Warren Russell said crude oil prices on the New York market likely will remain sluggish during the second quarter while many US oil refineries undergo maintenance.
“US crude and product stocks continue to make new highs, underscoring the oversupply in the oil market,” Russell said.
Contact Paula Dittrick at [email protected].
*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.
