MARKET WATCH: NYMEX, Brent oil prices rise on Middle East tenions

March 21, 2018
Oil prices rose Mar. 20, which analysts said stemmed from concerns about geopolitical risk to world oil supply if the US takes a sterner stance against Iran as some have suggested.

Oil prices rose Mar. 20, which analysts said stemmed from concerns about geopolitical risk to world oil supply if the US takes a sterner stance against Iran as some have suggested.

“Market participants have shifted their focus from the rising US oil production to the risks to supply,” Commerzbank analysts said.

Brent crude futures for May reached as high as $67.88/bbl before settling lower. But the session’s high was Brent’s highest level since late February. US light, sweet crude oil for April delivery saw a trading session high of $63.81/bbl before settling lower.

Crude prices settled higher on Mar. 21 after Saudi Crown Prince Mohammed bin Salman’s met with US President Donald Trump in Washington, DC.

US and Saudi officials have both criticized a 2015 international agreement to curb Iran’s nuclear ambitions. For months, Trump has threatened to pull out of the deal and reimpose economic sanctions on Iran.

“You still have geopolitical considerations and possible US action on Iranian sanctions…that is going to be relatively prompt in May,” Petromatrix strategist Olivier Jakob said. “So even though you do see signs that the market is lax on the physical side, do you go aggressively bearish when you have the potential for something happening between the US and Iran?”

Oil analysts also question if the nomination of Mike Pompeo as new US Secretary of State could sway oil prices. Pompeo previously has opposed the Iranian nuclear deal.

Meanwhile, the Organization of Petroleum Exporting Countries and other major producers, including Russia, have crude production-cut agreement to hold back 1.8 million b/d since Jan. 1, 2017, in efforts to reduce world oil supply and raise oil prices.

Indications of rising US shale production has limited oil prices recently. US crude output surpassed 10 million b/d earlier this month.

The US Energy Information Administration was scheduled Mar. 21 to release its weekly oil and products report for the week ended Mar. 16.

Separately, the American Petroleum Institute reported Mar. 20 that US crude supplies fell by 2.7 million bbl for the week ended Mar. 16.

Energy prices

The April light, sweet crude contract on the NYMEX added $1.34 on Mar. 20 to settle at $63.40/bbl. The May contract gained $1.41 to $63.54/bbl.

The NYMEX natural gas price for April added 2¢ to $2.67/MMbtu. The Henry Hub cash gas price gained 3¢ to $2.66/MMbtu on Mar. 20.

Ultralow-sulfur diesel for April increased by 4¢ to remain at a rounded $1.95/gal. The NYMEX reformulated gasoline blendstock for April gained 4¢ to $1.96/gal.

Brent crude oil for May jumped $1.37 to $67.42/bbl on London’s International Commodity Exchange. The June contract was up $1.31 to $67.13/bbl. The gas oil contract for April was $593.75/tonne, up $9.

OPEC’s basket of crudes was $64.11/bbl on Mar. 20, up 80¢.

Contact Paula Dittrick at [email protected].