The oil price benchmarks on the New York and London markets fell by more than $1/bbl on May 1 on a strengthening US dollar. Oil sells on most world markets in US dollars, so a rising dollar makes oil more expensive for buyers starting with other currencies.
Analysts report oil prices have gained about 10% overall since Jan. 1 on rising geopolitical tensions, falling output in Venezuela, and production cuts by the Organization of Petroleum Exporting Countries and other major producers.
The US dollar rallied to its highest level of the year on May 1 in advance of a US Federal Reserve’s rate-setting meeting on May 2.
Investors also awaited the latest weekly report on US oil and production inventories that the US Energy Information Administration was scheduled to release later May 2.
Separately, the American Petroleum Institute said its own estimate showed US oil supplies increased by 3.4 million bbl for the week ended Apr. 27.
The Wall Street Journal surveyed 14 investment bankers on oil prices. The poll showed they expect prices to be $1/bbl higher for the year than they did in a March survey.
The April WSJ survey shows bankers expect Brent will average over $64/bbl on the London market in 2018 while light, sweet oil prices on the New York market will average just above $60/bbl.
“OPEC has done a better job than expected” in its efforts to curb crude output, ING Bank commodity strategist Warren Patterson said. “The market is likely to remain well supported.”
Energy prices
The June light, sweet crude contract on the NYMEX fell $1.32 on May 1 to settle at $67.25/bbl. The July price was down $1.35 to settle at $67.13/bbl.
The NYMEX natural gas price for June gained nearly 4¢ to settle at a rounded $2.80/MMbtu. The Henry Hub cash gas price was $2.75/MMbtu on May 1, up 7¢.
Ultralow-sulfur diesel for June fell nearly 5¢ to settle at a rounded $2.10/gal. The NYMEX reformulated gasoline blendstock for June declined 4¢ to a rounded $2.09/gal.
Brent crude oil for July fell $1.56 to settle at $73.13/bbl on London’s International Commodity Exchange. The July contract was down $1.47 to $72.70/bbl. The gas oil contract for May was $648.75/tonne, down $6.55.
OPEC’s basket of crudes averaged $71.01/bbl on May 1, up 41¢.
Contact Paula Dittrick at [email protected].
