MARKET WATCH: NYMEX, Brent crude oil prices gain on Russia-OPEC talk speculation

Light, sweet crude oil prices settled above $32/bbl on the New York market Jan. 27 while Brent crude prices settled above $33/bbl. Analysts attributed the price support to speculation that some major producers might consider cutting oil output.

Reuters news service on Jan. 27 cited Russian news agency TASS as reporting that Russia’s state-owned oil pipeline company Transneft’s top executive suggested Russia and the Organization of Petroleum Exporting Countries might discuss possible oil production cuts.

A Kremlin spokesman said Russian officials frequently discuss the world oil market with other countries, but that it was too early to talk about any coordinated effort.

Meanwhile, US oil and product supplies increased although the government’s weekly statistics also showed a slight fall in US oil production.

The Energy Information Administration estimated US commercial crude oil inventories, excluding the Strategic Petroleum Reserve, increased 8.4 million bbl for the week ended Jan. 22 from the previous week. The latest total was 494.9 million bbl, the Petroleum Status Report said Jan. 27.

EIA said US oil production declined 14,000 b/d to total 9.22 million b/d for the week ended Jan. 22. Output had peaked at 9.7 million b/d during April 2015, and it has hovered around 9.2 million b/d in recent months.

On Jan. 28, EIA estimated natural gas in underground storage across the Lower 48 at 3.086 tcf as of Jan. 22, marking a net decline of 211 bcf from the previous week. Stocks were 530 bcf higher than last year at this time and 432 bcf above the 5-year average of 2.654 tcf, the Gas Storage Report said.

Energy prices

The March crude oil contract on the New York Mercantile Exchange gained 85¢ to settle at $32.30/bbl on Jan. 27, marking the highest settlement since Jan. 8. The April contract rose by 86¢ to $33.76/bbl.

The NYMEX natural gas contract for February gained 1¢ to a rounded $2.19/MMbtu. The Henry Hub gas price was up 1¢ to $2.24/MMbtu on Jan. 27.

Heating oil for February delivery rose 6¢ to a rounded $1.03/gal. The price for reformulated gasoline stock for oxygenates blending for February was down a fraction of a penny to remain at a rounded $1.05/gal.

The March ICE contract for Brent crude gained $1.30 to settle at $33.10/bbl on Jan. 27, and the April contract climbed $1.36 to $33.93/bbl. The ICE gas oil contract for February was $292/tonne, up $9.25.

The average price for OPEC’s basket of 12 benchmark crudes for Jan. 27 was $26.40/bbl, up $1.29.

Contact Paula Dittrick at paulad@ogjonline.com.