MARKET WATCH: NYMEX front-month crude oil prices approach $48/bbl

The light, sweet crude oil contract for May delivery rose modestly on Mar. 24 to settle just under $48/bbl on the New York market while the Brent crude contract for the same month settled under $51/bbl in London for a fourth straight trading session.

The light, sweet crude oil contract for May delivery rose modestly on Mar. 24 to settle just under $48/bbl on the New York market while the Brent crude contract for the same month settled under $51/bbl in London for a fourth straight trading session.

Market participants apparently shrugged off the latest Baker Hughes Inc. rig count, which showed there were 809 active drilling rigs in the US for the week ended Mar. 24, up 20 units from a week ago (OGJ Online, Mar. 24, 2017).

Oil prices have fallen since February, which analysts attribute to continuing high crude inventories worldwide.

During the weekend, participants at a joint OPEC, non-OPEC Ministerial Monitoring Committee (JMMC) meeting in Kuwait reaffirmed 94% compliance during February with the production-cut targets. That was up 8% from January compliance. Major producers agreed in December 2016 to cut production by 1.8 million b/d starting in January, with OPEC members accounting for 1.2 million b/d of that total.

RBC Capital Markets commodity strategist Helima Croft noted Algeria has joined Kuwait in calling for a 6-month extension of the production-cut targets. Croft said Saudi Arabia remains the most important country to watch in coming weeks for indicators of what OPEC might do.

“We think both Russia and Iraq will eventually be in the rollover camp because their leaders will determine that their domestic interests will be better served by staying the course,” Croft said, adding, “We cannot rule out some confusing comments from these two,” pending the April JMMC meeting and the May 25 OPEC meeting.

Energy prices

The crude oil contract for May delivery on the New York Mercantile Exchange gained 27¢ on Mar. 24 to close at $47.97/bbl while the June contract rose 25¢ to $48.51/bbl.

The natural gas price for April rose 2.5¢ to a rounded $3.08/MMbtu. The near-month US gas futures contract has gained in 19 of 22 sessions, rising fairly steadily since its 2017 low of $2.56/MMbtu on Feb. 21. The Henry Hub cash gas price closed Mar. 24 at $2.92/MMbtu, down 1¢.

Analysts said colder weather helped drive heating demand in recent weeks and that gas storage is below last year’s levels. The US Energy Information Administration estimated gas in underground storage across the Lower 48 at 2.092 tcf as of Mar. 17, marking a net decrease of 150 bcf from the previous week. Gas storage levels were 399 bcf less than for the same time last year (OGJ Online, Mar. 24, 2017).

Heating oil for April edged up less than 1¢ to a rounded $1.50/gal. Reformulated gasoline stock for oxygenate blending for April climbed 1.5¢ to a rounded $1.60/gal.

The Brent crude contract for May on London’s ICE increased 24¢ to $50.80/bbl. The June contract rose 26¢ to $50.92/bbl. The gas oil contract settled at $449/tonne on Mar. 24, down $1.25.

The average price for OPEC’s basket of benchmark crudes on Mar. 24 was $48.26/bbl, down 9¢.

Contact Paula Dittrick at paulad@ogjonline.com.

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