Crude oil prices rose across world markets Apr. 17 as investors suggested that ongoing geopolitical risks could disrupt oil supplies in an increasingly tight market. The US government was scheduled to release its weekly oil and products inventory on Apr. 18.
US light, sweet crude for May and June both settled slightly above $66.50/bbl after wavering between gains and losses in Apr. 17 trading. Brent for June settled above $71.50/bbl on the London market that day.
Traders and analysts suggest politically driven consequences following US-led military strikes against Syria could possibly disrupt crude oil supply flow across the Middle East. These concerns have led to rising crude oil prices worldwide.
Ole Hansen, Saxo Bank head of commodity strategy, said international political tensions have provided some support for crude oil prices while undermining most other commodities.
“We are facing multiple sources of geopolitical risk, including Russia and the West on opposing sides in Syria, as well as Iran against Saudi Arabia and the US,” Hansen said. “While increasing the level of uncertainty, these simmering tensions have also been providing some underlying support for crude oil.”
Western political leaders are concerned about the Syrian government’s possible use of chemical weapons. US-Russia tensions rose because Russia is a Syrian ally. Meanwhile, US President Donald Trump faces a May 12 deadline on whether to exit an international agreement concerning Iran and its nuclear program.
“Geopolitical tensions pushed market fears of higher US crude production to the background,” said Hans van Cleef, ABN-AMRO senior energy economist.
ABN-AMRO forecasts light, sweet crude oil on the New York market will average $66/bbl for 2018 while Brent crude will average $71/bbl on the London market.
Energy prices
The May light, sweet crude contract on the NYMEX gained 30¢ on Apr. 17 to settle at $66.52/bbl. The June contract rose 31¢ to $66.51/bbl.
The NYMEX natural gas price for May fell 1¢ to a rounded 2.74/MMbtu. The Henry Hub cash gas price was up 1¢ to $2.83/MMbtu.
Ultralow-sulfur diesel for May decreased 1¢ to a rounded $2.06/gal. The NYMEX reformulated gasoline blendstock for May edged up less than a penny to a rounded $2.04/gal.
Brent crude oil for June rose 16¢ to settle at $71.58/bbl on London’s International Commodity Exchange. The July contract was up 16¢ to $70.97/bbl. The gas oil contract for May was $628/tonne.
The Organization of Petroleum Exporting Countries basket of crudes averaged $68.36/bbl on Apr. 17, down 5¢.
Contact Paula Dittrick at [email protected].
