MARKET WATCH: Oil benchmarks drop ahead of OPEC committee meeting

May 20, 2019
Oil prices dropped on both the New York and London markets May 17, ending three sessions of gains. Analysts attributed the price drop to heightened US-Iran tensions and rising concerns about possible disruptions to oil shipments across the Middle East.

Oil prices dropped on both the New York and London markets May 17, ending three sessions of gains. Analysts attributed the price drop to heightened US-Iran tensions and rising concerns about possible disruptions to oil shipments across the Middle East.

Meanwhile, oil investors and analysts waited to see if Saudi Arabia and other major oil producers will extend production-cut targets beyond June.

The Organization of Petroleum Exporting Countries and some non-OPEC countries, including Russia, met in Jeddah, Saudi Arabia, on May 19 to discuss production levels during OPEC's Joint Ministerial Monitoring Committee meeting.

A decision will be finalized by OPEC and its allies during a June meeting in Vienna. The group agreed in December 2018 to cut output by a total of 1.2 million b/d. On May 19, Saudi Energy Minister Khalid al-Falih told reporters that different production scenarios were discussed.

For most oil ministers, the scenario “that resonates is to roll over” production targets, al-Falih said, adding ministers “prefer the ‘wait’ position,” as they monitor world oil demand.

Russia Energy Minister Alexander Novak told reporters, “We are looking at various options [for the second half of 2019].”

The meeting came amid escalating concerns of a possible military conflict in the Middle East. After the US ban on Iran’s oil exports, two Saudi tankers were damaged by unknown attackers, and a Saudi pipeline was hit by an Iranian ally.

Meanwhile, US President Donald Trump has increased the US naval presence in the Persian Gulf and pulled diplomats out of Iraq.

Energy prices

Crude oil on the New York Mercantile Exchange for June fell 11¢ to settle at $62.76/bbl on May 17 while the July contract declined 14¢ to settle at $62.92/bbl.

NYMEX natural gas for June edged down by nearly 1¢ to settle at $2.63/MMbtu.

Ultralow-sulfur diesel for June decreased by nearly 3¢ to a rounded $2.09/gal. The NYMEX reformulated gasoline blendstock for June dropped slightly more than 1¢ to a rounded $2.05/gal.

Brent crude for July fell 41¢ to $72.21/bbl. The August price decreased 44¢ to settle at $71.26/bbl.

The gas oil contract for June fell $8.25 to $657/tonne on May 17.

The average for OPEC’s basket of crudes was $72.57/bbl on May 17, down 4¢.

Contact Paula Dittrick at [email protected].