Benchmark crude oil prices gained on markets in both London and New York Mar. 11 after Saudi Energy Minister Khalid al-Falih said production cuts led by the Organization of Petroleum Exporting Countries likely will continue until at least June.
Speaking before the start of CERAWeek by IHS Markit in Houston, al-Falih told Reuters Mar. 11 that it would be too early to change a production agreement by OPEC and some non-OPEC countries, including Russia, before June.
A Saudi official speaking on the sidelines of CERAWeek said Saudi Arabia plans to cut crude oil exports in April to below 7 million b/d, Reuters reported.
The production cuts have supported oil prices this year. Major producers, both OPEC and some non-OPEC, pledged to cut 1.2 million b/d in crude supply starting Jan. 1. The group is scheduled to meet Apr. 17-18 and June 25-26 to discuss world oil supply.
Argentina Energy Minister Gustavo Lopetegui told a Houston luncheon of industry representatives that pipeline construction contracts worth as much as $1.8 billion could be announced by September.
The pipeline construction would move natural gas from Vaca Muerta to Buenos Aires. Lopetegui said two phases of the pipeline could move as much as 40 million cu m/day of gas, more than half of Vaca Muerta’s current gas production.
Vaca Muerta’s crude oil production is expected to reach 100,000 b/d in this year’s second half compared with current production of 80,000 b/d, he said.
Separately, Bank of America Merrill Lynch analysts forecast Brent crude oil could reach $70/bbl this year although the benchmark currently faces constraints from concerns about economic slowdowns.
“Brent prices have struggled to push firmly above $65/bbl in part because a strong US dollar remains a major headwind for commodity prices. In addition, global gross domestic product growth has been soft, and oil demand has yet to pick up seasonally,” the report said.
Oil trades in US dollars so a strengthening dollar makes oil more expensive for buyers using other currencies.
Energy prices
The April contract for light, sweet crude oil on the New York Mercantile Exchange increased 72¢ to settle at $56.79/bbl on Mar. 11. The contract for May delivery also gained 69¢ to settle at $57.12/bbl.
NYMEX natural gas for April declined 9¢ to a rounded $2.77/MMbtu on Mar. 11.
Ultralow-sulfur diesel for April edged down less than 1¢ to a rounded $1.99/gal. The NYMEX reformulated gasoline blendstock for April gained 2¢ to $1.82/gal.
Brent crude for May delivery increased 84¢ to $66.58/bbl while the June contract increased 82¢ to settle at $66.48/bbl.
The gas oil contract for March was up $1.75 to $612/tonne on Mar. 11.
The average price for OPEC’s basket of crudes was $66.01/bbl on Mar. 11, up $1.23.
Contact Paula Dittrick at [email protected].
