Light, sweet crude oil prices fell slightly on the New York market Apr. 3 as did Brent crude for June in London. Prices remained close to 2019 highs despite an increase in crude inventories as cuts by members of the Organization of Petroleum Exporting Countries as well as US sanctions keep the supply and demand forecast tight.
Analysts expected a small drawdown in supplies, but the US Energy Information Administration’s weekly oil and products inventory report showed crude oil inventories jump by 7.2 million bbl (OGJ Online, Apr. 3, 2019). At 449.5 million bbl, US crude oil inventories are at the 5-year average for this time of year, the report indicated.
The crude inventory build contrasts with consensus calling for a draw of 900,000 bbl and a normal seasonal draw of 1.2 million bbl, said Raymond James analysts in an investor note Apr. 3.
“While sentiment on oil remains choppy, we see a broadly supportive fundamental backdrop: the larger US producers are exhibiting restraint in capital allocation; OPEC plus Russia’s production cuts are noticeably contributing to inventory draws; the picture for global demand growth is broadly upbeat; and IMO 2020 is looming 9 months from now. The 12-month futures strip ($61.89/bbl for WTI and $67.73/bbl for Brent) shows modest short-to-medium term backwardation for Brent, followed by a relatively flat curve; for comparison, our 2019 forecast is $62 WTI/$72 Brent and 2020 forecast is $92.50 WTI/$100 Brent,” the analysts said.
Wildcards, they continued, include possible supply disruptions above and beyond the current ones stemming from the uncertain political situation in Venezuela, and the prospect of global macro slowdown and the resulting impact on oil demand.
Energy prices
The May contract for light, sweet crude oil on the New York Mercantile Exchange fell 12¢ to settle at $62.46/bbl on Apr. 3. The price for June delivery dropped 9¢ to settle at $62.52/bbl.
NYMEX natural gas for May fell less than 1¢ to a rounded $2.67/MMbtu.
Ultralow-sulfur diesel for May fell less than 1¢ to remain at a rounded $2.01/gal. The NYMEX reformulated gasoline blendstock for May edged up 2¢ to settle at a rounded $1.95/gal.
Brent crude for June contract dropped 6¢ to settle at $69.31/bbl and the July price dropped 2¢ to settle at $68.91/bbl.
The gas oil contract for April fell $2.75 to settle at $611/tonne on Apr. 3.
OPEC’s basket of crudes for Apr. 3 was $69.12/bbl, up 29¢.
