Light, sweet crude oil prices rose by more than $1/bbl June 7 on the New York market while Brent crude oil prices rose about $2/bbl in London in what has been a volatile week for oil prices. Oil prices fell again in early June 8 trading on the New York futures market.
Analysts say market participants are nervous about world oil supply given Venezuela’s economic crisis and lower oil production combined with planned US sanctions against Iran, which are expected to reduce Iran’s oil exports and production.
Commerzbank analysts estimate world oil production needs to be raised by more than the 300,000 b/d to meet pending production gaps. Saudi Arabia already has suggested it could increase production to make up any shortfall, particularly from Iran.
Olivier Jakob, Petromatrix oil analyst, estimates at least 800,000 b/d will be taken off the market by Dec. 31 from reduced exports by Venezuela and Iran. He said the supply cut could be 1 million b/d, adding he believes his estimate is conservative.
The Organization of Petroleum Exporting Countries meets in Vienna on June 22. OPEC and some non-OPEC producers, including Russia, have been complying with production-cut targets to reduce world oil supply and support prices. They are discussing whether to maintain those targets, scheduled to expire Dec. 31, or to increase production.
“The political leadership is clearly coming from Russia and Saudi in terms of an increase, I think how they divide the increase between different countries isn’t clear,” Jakob said.
Energy prices
The July light, sweet crude contract on the New York Mercantile Exchange climbed $1.22 to settle at $65.95/bbl on June 7. The August price was up $1.19 to $65.89/bbl.
The NYMEX natural gas price for July gained 3¢ to a rounded $2.93/MMbtu. The Henry Hub cash gas price rose 8¢ to $2.93/MMbtu on June 7.
Ultralow-sulfur diesel for July increased 5¢ to a rounded $2.18/gal. The NYMEX reformulated gasoline blendstock for July gained 4¢ to settle at a rounded $2.11/gal.
Brent crude oil for August climbed by $1.96 to settle at $77.32/bbl on London’s International Commodity Exchange. The September contract was up $2.02 to $76.98/bbl. The gas oil contract for June was $668.25/tonne, up $13.50.
OPEC’s basket of crudes was $73.62/bbl on June 7, up 57¢.
Contact Paula Dittrick at [email protected].
