MARKET WATCH: Crude oil prices rise on EIA’s lower oil inventory

Light, sweet crude oil rallied to settle above $62/bbl on the New York market May 8 while Brent crude oil for July gained modestly to settle above $70/bbl on the London market after a weekly government report showed US oil inventories dropped more than expected.

May 9th, 2019

Light, sweet crude oil rallied to settle above $62/bbl on the New York market May 8 while Brent crude oil for July gained modestly to settle above $70/bbl on the London market after a weekly government report showed US oil inventories dropped more than expected.

Analysts also attributed rising prices to growing US-Iran tensions, which could disrupt oil supplies in the Middle East.

The US Energy Information Administration reported US crude supplies, excluding the Strategic Petroleum Reserve, declined by 4 million bbl for the week ended May 3. Separately, the American Petroleum Institute estimated US oil supplies rose by 2.8 million bbl for that week.

Barclays Research issued a Blue Drum research note in which analysts raised their third-quarter forecast for both Brent and US oil futures by $4/bbl on tighter supplies with the onset of US summer driving.

Barclays expects Brent crude will average $73/bbl in the third quarter while light, sweet crude oil futures will average $67/bbl.

“Lower output due to planned maintenance in the North Sea and the Caspian Sea over the next few weeks, coupled with dwindling Iranian exports due to tighter US sanctions and what has so far been a very measured Saudi response just before the peak demand season should support prices,” Amarpreet Singh of Barclays said.

Barclays expects Iranian crude exports will be reduced by at least 600,000 b/d over the next few weeks. “We do not expect Iranian crude exports to go down to zero,” Singh said.

Oil futures prices have been volatile this week. On May 7, the US oil future contract for June delivery had settled at $61.40 a barrel on the New York market, the lowest front-month contract finish since Mar. 29, said Dow Jones Market Data.

The Brent July contract settled at $69.88/bbl on May 7, its lowest front-month contract settlement since Apr. 4.

Energy prices

Crude oil on the New York Mercantile Exchange for June added 72¢ to settle at $62.12 on May 8 while the July contract rose 71¢ to settle at $62.22.

NYMEX natural gas for June added 7¢ to $2.61/MMbtu.

Ultralow-sulfur diesel for June gained nearly 2¢ to a rounded $2.06/gal. The NYMEX reformulated gasoline blendstock for June climbed nearly 3¢ to a rounded $1.97/gal.

Brent crude for July was up 49¢ to $70.37/bbl. The August price gained 55¢ to settle at $69.62/bbl.

The gas oil contract for May increased $5 to $639.25/tonne on May 8. The average for OPEC’s basket of crudes was $69.88/bbl on May 8, down 57¢.

Contact Paula Dittrick at paulad@ogjonline.com

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