Light, sweet crude oil fell to settle below $62/bbl on the New York market May 7 while Brent crude oil fell by more than $1 to settle below $70/bbl in London after US officials suggested China was reneging on its commitment to a US-China trade agreement.
The likelihood of a final resolution in the US-China trade talks remained uncertain while the US benchmark crude contract reached its lowest close on May 7 since Mar. 29.
On world markets, oil supply has fallen from Iran, Libya, and Venezuela. US President Donald Trump’s administration supports Venezuela opposition leader Juan Guaido. Meanwhile, Venezuela President Nicolas Maduro seeks to retain his position despite violent street protests.
In a research note issued earlier this month, RBC Capital Markets analyst Helima Croft said the struggle for power in Venezuela “remains very fluid with international actors wading more deeply into the crisis along Cold War battle lines.”
Croft said, “The Venezuelan situation will likely loom large in the Organization of Petroleum Exporting Countries’ deliberations as ministers weigh how many additional barrels may be needed to fill an expanding supply gap that is being driven by geopolitics as opposed to geology.”
The US Energy Information Administration was scheduled to release its weekly oil and product inventory report on May 8. Analysts have differing forecasts for inventory levels.
The Wall Street Journal said its survey of 11 analysts and traders concluded oil inventories are expected to have increased by 200,000 bbl for the week ended May 3. But the WSJ noted that survey participants were split, with six expecting an increase and five expecting a drop.
Energy prices
Crude oil on the New York Mercantile Exchange for June dropped 85¢ to settle at $61.40/bbl on May 7 while the July contract fell 86¢ to settle at $61.51/bbl.
On the New York Mercantile Exchange, natural gas for June edged up slightly more than 1¢ to a rounded $2.54/MMbtu.
Ultralow-sulfur diesel for June dropped 3¢ to reach a rounded $2.04/gal. The NYMEX reformulated gasoline blendstock for June dropped nearly 5¢ to a rounded $1.95/gal.
Brent crude for July declined $1.36 to $69.88/bbl. The August price fell $1.30 to settle at $69.07/bbl.
The gas oil contract for May dropped $5.75 to $634.25/tonne on May 7. The average for OPEC’s basket of crudes was $70.45/bbl on May 7, up 22¢.
Contact Paula Dittrick at [email protected].
