Light, sweet crude oil for April dropped modestly on the New York market Mar. 15 but still settled just above $58.50/bbl on Mar. 15 while Brent crude oil for May also dropped modestly in London but again settled above $67/bbl.
Analysts said existing oil production cuts by major producers have supported oil prices for much of the year. The supply agreement is led by the Organization of Petroleum Exporting Countries and some non-OPEC countries, including Russia.
Meanwhile, investor concerns about a world economic downturn could hinder fuel consumption and constrain oil prices, analysts added.
Ole Hansen, Saxo Bank head of commodity strategy, said world commodity prices experienced “a comeback” for the week ended Mar. 15 on a weakening US dollar. Oil is traded in US dollars so a weakening dollar makes oil cheaper for buyers starting with other currency.
“Oil remains supported by tightening supply, both voluntary (from Saudi Arabia) and forced (from Iran and Venezuela),” Hansen said. “Worries about growth and future demand for crude oil remain just that at this stage, with the market instead responding to the continued tightening of supply.”
OPEC and non-OPEC ministers met in Baku, Azerbaijan, to monitor their oil production-cut agreement. Saudi Arabia suggested on Mar. 17 that OPEC might extend the 1.2 million b/d production-cut total.
That production-cut agreement currently is scheduled to expire in June, but it could be extended into the second half of this year if producers agree.
“As long as…inventories are rising, and we are far from normal levels, we will stay the course, guiding the market toward balance,” Saudi Arabia Energy Minister Khalid al-Falih said.
Energy prices
The April contract for light, sweet crude oil on the New York Mercantile Exchange decreased 9¢ to settle at $58.52/bbl on Mar. 15. The contract for May delivery also dropped 9¢ to settle at $58.82/bbl.
NYMEX natural gas for April dropped 6¢ to a rounded $2.80/MMbtu on Mar. 15.
Ultralow-sulfur diesel for April declined nearly 2¢ to a rounded $1.97/gal. The NYMEX reformulated gasoline blendstock for April nudged up by a fraction of a penny to remain at a rounded $1.85/gal.
Brent crude for May delivery decreased 7¢ to $67.16 while the June contract decreased 9¢ to settle at $67.04/bbl.
The gas oil contract for April fell $4 to $607.75/tonne on Mar. 15.
The average price for OPEC’s basket of crudes was $66.91/bbl on Mar. 15, down 38¢.
Contact Paula Dittrick at [email protected].
