Brent crude oil for July delivery temporarily reached above $80/bbl on the London market before dropping by the end of the May 17 trading session to close at $79.30/bbl. Light, sweet crude oil on the New York market settled unchanged from the previous day at $71.49/bbl.
US President Donald Trump said he is stopping US participation in a 2015 international agreement to curb Iran’s nuclear program. Trump plans new US sanctions on Iran. The European Union supports the 2015 agreement and encourages Iran to abide by its agreement’s terms.
Barclays Research forecast Brent crude will average $70/bbl for 2018 and drop to $65/bbl on average for 2019. Barclays forecast that US light, sweet crude future prices will average $65/bbl for 2018 and drop to $59/bbl on average for 2019.
In a May 18 Blue Drum research note, Barclays analysts said they doubt that geopolitical developments and expectations of oil demand “will live up to their hype.” Barclays analysts noted they expect Venezuela’s production will drop below 1 million b/d.
But Iran’s production may prove to be more resilient than many anticipate, Barclays said.
“We continue to expect [oil] prices to decline through end-2019, barring further disruptions,” the Blue Drum note said.
Michael Cohen of Barclays in New York noted the Trump administration cannot employ sanctions as a foreign policy lever on Venezuela and Iran without triggering higher US gasoline prices.
“That means that US policy will have an even more outsized effect on oil prices in the months ahead,” Cohen said.
Energy prices
The June light, sweet crude contract on the New York Mercantile Exchange settled at $71.49/bbl, unchanged from May 16. The July price was up 1¢ to $71.57/bbl.
The NYMEX natural gas price for June increased 4¢ to remain at a rounded $2.86/MMbtu. The Henry Hub cash gas price dropped 5¢ to $2.72/MMbtu on May 17.
Ultralow-sulfur diesel for June added 1¢ to settle at a rounded $2.28/gal. The NYMEX reformulated gasoline blendstock for June declined less than 1¢ to settle at a rounded $2.24/gal.
Brent crude oil for July increased 2¢ to settle at $79.30/bbl on London’s International Commodity Exchange. The August contract was up 8¢ to $79.25/bbl. The gas oil contract for June was $704.25/tonne, up $19.75.
OPEC’s basket of crudes was $76.75/bbl for May 17, up $1.57.
Contact Paula Dittrick at [email protected].
