Light, sweet crude futures prices for March and April delivery each gained more than $1 on Feb. 1 with the front-month price settling above $55/bbl on the New York market while Brent for April gained nearly $2 to approach $63/bbl in London.
US crude futures prices rallied in January after having dropped about 40% during the last quarter of 2018. Although crude prices regained about half of that in January alone, analysts note that markets remain volatile given worldwide geopolitical uncertainties.
Ole Hansen, Saxo Bank commodity strategist, said the New York Federal Reserve reports a US recession probability index is at its highest level since 2008 while China’s economic data shows deteriorating economic growth.
“The strong returns in commodities witnessed during the early parts of January faded somewhat during the final week,” Hansen said. “Despite one of the coldest winters on record in parts of the US, natural gas priced out of New York nevertheless slumped by more than 9%.”
Hansen said crude oil prices remain rangebound after failing to receive a “lower supply-driven” boost from US sanctions against Venezuela’s state oil company and Saudi Arabia officials saying they will cut February crude oil production below a voluntarily agreed limit of 10.33 million b/d.
“Having been rangebound for the past 3 weeks, the short-term direction could be lower as both West Texas Intermediate and especially Brent continue to consolidate within the established $5 ranges,” Hansen said of oil-price movements.
“WTI crude oil is currently stuck in a $50-55.50/bbl range,” Hansen said. “Movements were seen in the spread between WTI and Brent crude, which narrowed to $7/bbl, the tightest level since August.”
He said US sanctions against Venezuela oil imports supports North American crude oil prices as US refineries use other heavy crude oil such as Mexican Mars and Western Canadian Select.
Energy prices
The March contract for light, sweet crude oil on the New York Mercantile Exchange gained $1.47 to settle at $55.26/bbl on Feb. 1 while the contract for April delivery increased $1.51 to settle at $56.66/bbl.
NYMEX natural gas for March decreased 8¢ to close at a rounded $2.73/MMbtu on Feb. 1.
Ultralow-sulfur diesel for March increased 3.5¢ to a rounded $1.91/gal. The NYMEX reformulated gasoline blendstock for February rose nearly 6¢ to a rounded $1.44/gal.
Brent crude for March delivery held unchanged at $61.65/bbl while the April contract gained $1.19 to settle at $62.75/bbl. The gas oil contract for February decreased by $6.25 to $578.25/tonne on Feb. 1.
The average price for the Organization of Petroleum Exporting Countries’ basket of crudes was $60.93/bbl on Feb. 1, down 26¢.
Contact Paula Dittrick at [email protected].
