MARKET WATCH: NYMEX, Brent crude oil prices each drop more than $1/bbl
The light, sweet crude price for June delivery fell by more than $1/bbl on the New York market May 2 while Brent crude oil price for July delivery fell by more than $1.50/bbl on the London market.
The US benchmark oil price started falling in early trading, and the price dip accelerated after Genscape Inc. estimated oil supply at Cushing, Okla., rose by 871,000 bbl for the week ended Apr. 29.
Analysts and traders had hoped Cushing inventory levels would start declining. Genscape sells its proprietary supply estimates to clients, and its reports are closely watched by analysts and traders.
Cushing crude oil stocks are about 7% higher vs. the same time last year, and analysts said high levels at the storage hub pressured oil prices down again.
Inventories have lingered at record levels for months at Cushing, the delivery point for crude oil trading on the New York futures market. Supply levels have grown primarily because of 2014-15 hikes in US oil production and also because new pipelines added to Cushing supply in the last 2 years.
Separately, Platts Analytics said oil production from shale plays in North Dakota and Texas dropped slightly in March vs February. Platts Analytics is a unit of S&P Global Platts.
Oil production from the Eagle Ford shale basin in South Texas was down 35,000 b/d, or 3%, in March and has been in decline for 8 consecutive months. Crude oil production in the Bakken formation in North Dakota dropped 2% month over month during March, or about 17,000 b/d, Platts Analytics said.
Taylor Cavey, energy analyst with Platts Analytics, said, “In 2015, producers in both the Eagle Ford and Bakken realized tremendous efficiency gains through cost reductions, quicker drill times, and higher initial production rates.”
But the ongoing oil price slump means “the extent to which further efficiencies can be reached is questionable…. Producers can only stretch themselves so far.”
The NYMEX natural gas contract for June declined nearly 14¢ to a rounded $2.04/MMbtu. The Henry Hub price was $1.91/MMbtu, unchanged from the previous day.
Heating oil for June delivery fell 3¢ to a rounded $1.35/gal. The price for reformulated gasoline stock for oxygenates blending for June dropped 4¢ to a rounded $1.56/gal.
The Brent crude contract for July on London’s ICE was down $1.54 to $45.83/bbl. The August contract was down $1.50 to $46.24/bbl. The gas oil contract was $410.25/tonne, down $2.75.
The Organization of Petroleum Exporting Countries basket of crudes was $42.47/bbl, down 23¢.
Contact Paula Dittrick at firstname.lastname@example.org.