Light, sweet crude oil on the New York market and Brent crude oil prices in London gained for a second consecutive trading session June 7. Each of the two oil benchmarks rallied to settle more than $1/bbl higher compared with the previous settlement.
Analysts attributed the gains to a possible agreement in US-Mexico trade policy that would avoid tariffs US President Donald Trump has threatened to impose on imports from Mexico.
A drop in the weekly rig count also contributed to higher oil prices. Baker Hughes reported the number of active US drilling rigs declined to its lowest since February 2018.
The US drilling rig count fell 9 units, reaching 975 rigs working for the week ended June 7, Baker Hughes said. The count was down 87 units from the 1,062 rigs working this time a year ago (OGJ Online, June 7, 2019).
Paul Horsnell, head of commodities research at Standard Chartered Bank, said US oil demand did weaken somewhat during May, but he considers it to be temporary. Horsnell suggests oil buyers incorrectly priced oil as if a US economic slowing was on par with a world economic slowing.
In a research note, Horsnell wrote economic indicators “would suggest that oil prices have overshot to the downside.”
Energy prices
Light, sweet crude oil on the New York Mercantile Exchange for July delivery was up $1.40 to $53.99/bbl while the August contract rose by $1.43 to settle at $54.16/bbl.
NYMEX natural gas for July was up 1¢ to settle at a rounded $2.34/MMbtu.
Ultralow-sulfur diesel for July increased 3¢ to a rounded $1.82/gal. The NYMEX reformulated gasoline blendstock for July gained 3¢ to a rounded $1.74/gal.
Brent crude for August climbed $1.62 to settle at $63.29/bbl. The September price increased $1.66 to settle at $62.18/bbl.
The gas oil contract for June gained $16 to $558/tonne on June 7.
The average for the Organization of Petroleum Exporting Countries’ basket of crudes was not immediately available.
Contact Paula Dittrick at [email protected].
