MARKET WATCH: NYMEX crude settles above $73/bbl, Brent well above $82/bbl

Oct. 1, 2018
Light, sweet crude oil prices gained more than $1 to settle above $73/bbl on the New York market Sept. 28 while Brent crude oil for November gained $1 to approach $83/bbl in London. Oil prices rose amid concerns about falling Iranian crude exports with full implementation of US sanctions on Nov 4 along with concerns about declining production from Venezuela.

Light, sweet crude oil prices gained more than $1 to settle above $73/bbl on the New York market Sept. 28 while Brent crude oil for November gained $1 to approach $83/bbl in London.

Oil prices rose amid concerns about falling Iranian crude exports with full implementation of US sanctions on Nov 4 along with concerns about declining production from Venezuela.

Bank of America Merrill Lynch analysts forecast Brent will average $80/bbl in 2019, up from the bank’s previous forecast of $75/bbl.

“Our previous projections only embedded Iran supply losses of 500,000 b/d,” BOA Merrill analysts said in a research note. “We now include a 1 million-b/d reduction.”

BOA Merrill analysts added in a Sept. 25 note, “The Iran factor may dominate the market near term and cause a spike, but emerging market demand concerns could reappear.”

US President Donald Trump is pressuring governments and companies worldwide to cut their Iranian oil purchases. In May, Trump announced a US exit from an international agreement to lift sanctions against Iran in exchange for Iran’s cooperation regarding its nuclear program.

“Iran will lose sizeable export volumes…the market is ill-equipped to fill the supply gap,” Harry Tchilinguirian, global head of commodity markets strategy at French bank BNP Paribas, told the Reuters Global Oil Forum in late September.

The Institute of International Finance (IIF) told Reuters that Iran’s crude oil and condensates exports were 2.8 million b/d in April compared with 2 million b/d in September.

The IIF said in an updated research note that Iran’s oil exports are falling even although Iran is selling key grades at a deep discount and using its own tankers to ship products to China and India.

In addition, the IIF said Iranian shippers also are providing generous payment terms and, in some cases, accepting euros and Chinese yuan instead of US dollars, Reuters reported. IIF represents major banks and financial institutions worldwide.

Energy prices

The light, sweet crude contract for November delivery on the New York Mercantile Exchange gained $1.13 to $73.25/bbl on Sept. 28. The December contract rose $1.10 to settle at $73.06/bbl.

The NYMEX natural gas price for November was down nearly 5¢ to a rounded $3.01/MMbtu. The Henry Hub cash gas fell 8¢ to $2.99/MMbtu.

Ultralow-sulfur diesel for October rose nearly 3¢ to $2.35/gal. The NYMEX reformulated gasoline blendstock for October increased nearly 2¢ to settle at $2.10/gal.

Brent crude oil for November jumped $1 to $82.72/bbl on London’s International Commodity Exchange. The December contract climbed $1.35 to $82.73/bbl. The gas oil contract for October gained $11.50 to settle at $724.25/tonne on Sept. 26.

The Organization of Petroleum Exporting Countries’ basket of crudes for Sept. 26 averaged $81.48/bbl, up 60¢.

Contact Paula Dittrick at [email protected].