MARKET WATCH: NYMEX crude oil settles under $61/bbl on US Cabinet shifts

March 14, 2018
Oil prices fell on markets in New York and London for a second consecutive day Mar. 13 on news of staffing changes within the US administration and pending the weekly government report on US oil and products inventory levels.

Oil prices fell on markets in New York and London for a second consecutive day Mar. 13 on news of staffing changes within the US administration and pending the weekly government report on US oil and products inventory levels.

US President Donald Trump’s decision to replace Secretary of State Rex Tillerson could contribute to the end of the 2015 international agreement to curb Iran’s nuclear program, which could influence world oil supply and oil prices, analysts said.

Trump said he wants Central Intelligence Agency Director Mike Pompeo to become secretary of state. A reimposition of US economic sanctions on Iran could limit Iran’s oil exports and reduce global supply.

“The…scenario is bullish for oil because Pompeo is a known hawk against Iran, and I think he will embolden Donald Trump to exit the nuclear agreement when he has to make the decision [in] May,” said Helima Croft, RBC Capital Markets head of global commodity strategy.

Pompeo has criticized the Iran deal and supported additional energy sanctions against Venezuela.

In a research note, RBC Capital Markets said additional US measures against Venezuela could cut Venezuela’s oil output by more than 1 million b/d.

The US Energy Information Administration was scheduled to release its inventory report on Mar 14.

Analysts surveyed by the Wall Street Journal said they expect the US crude inventory, excluding the Strategic Petroleum Reserve, will have gained 2.5 million bbl for the week ended Mar. 9. Separately, the American Petroleum Institute on Mar. 13 estimated US oil supplies increased 1.2 million bbl last week.

Moody’s Investors Service raised its medium-term price band for crude oil to $45-65/bbl from $40-60/bbl, saying continued production restraint by the Organization of Petroleum Exporting Countries and others, coupled with strong world oil demand growth, is leading to lower world oil inventories, which offsets increasing US shale production.

Moody’s maintained its price band for US natural gas prices at $2.50-3.50/MMbtu.

Even with crude prices at the high end of the $45-65 range during early 2018, Moody’s analysts expect prices will stay within this range over the medium term amid increased production and oil demand growth.

Energy prices

The April light, sweet crude contract on the NYMEX fell 66¢ on Mar. 13 to settle at $60.71/bbl. The May contract dropped 58¢ to $60.75/bbl.

The NYMEX natural gas price for April edged up less than 1¢ to a rounded $2.79/MMbtu. The Henry Hub cash gas price was down 1¢ to $2.76/MMbtu on Mar. 13.

Ultralow-sulfur diesel for April increased by 1¢ to a rounded $1.87/gal. The NYMEX reformulated gasoline blendstock for April fell nearly 1¢ to $1.88/gal.

Brent crude oil for May dropped 31¢ to $64.64/bbl on London’s International Commodity Exchange. The June contract was down 27¢ to $64.52/bbl. The gas oil contract for April was $568.75/tonne, up 75¢.

OPEC’s basket of crudes was $62.15/bbl on Mar. 13, down 38¢.

Contact Paula Dittrick at [email protected].