MARKET WATCH: NYMEX, Brent crude oil prices drop on oversupply concerns

Light, sweet crude oil prices for April dropped by more than $1/bbl on the New York market Mar. 2 while Brent crude oil prices for May on the London market also fell by more than $1/bbl, which analysts attributed to concerns about world oil supplies.

The Energy Information Administration said US crude oil inventories increased by 1.5 million bbl to 520.2 million bbl for week ended Feb. 24. (OGJ Online, Mar. 1, 2017). Meanwhile, US production was estimated at 9.032 million b/d, was up 31,000 b/d, the Petroleum Status Report said.

The reported oil build was smaller than the 2012-16 average build of 5.5 million bbl for the same reporting week, said S&P Global Platts. Analysts surveyed by S&P Global Platts before the weekly inventory report had expected crude stocks to rise 2.1 million bbl for the week ended Feb. 24.

Separately, the weekly natural gas report estimated gas in storage at 2.363 tcf as of Feb. 24. EIA said that was a 7 bcf net increase from the previous week. Stocks were 187 bcf less than last year at this time and 295 bcf above the 5-year average, the Weekly Gas Storage Report said.

On world oil markets, the Organization of Petroleum Exporting Countries and other major producers have promised to cut production by 1.8 million b/d total. The cuts started in January.

Russia’s oil production in February appeared to hold steady with January production at 11.11 million b/d. Russia pledged to cut 300,000 b/d by the end of the 6-month major producers’ agreement period.

Since January, Russia has decreased its crude and condensate production by about 120,000 b/d from the October 2016 level, the baseline of its promised cuts, said consultant FGE. The volume indicates Russia has fulfilled around 40% of its promise.

OPEC members Libya and Nigeria were exempted from the production cuts. Analysts are monitoring increasing production from the two African countries. OPEC production data for month of February is scheduled to be released in a Monthly Oil Market report on March 14.

Energy prices

The crude oil contract for April delivery on the New York Mercantile Exchange fell $1.22 on Mar. 2 to $52.61/bbl. The May contract was down $1.21 to $53.07.

The natural gas price for April held fairly steady at a rounded $2.80/MMbtu, up by a fraction of a penny. The cash gas price closed at $2.59/MMbtu, down 1¢.

Heating oil for April declined 4¢ to a rounded $1.58/gal. Reformulated gasoline stock for oxygenate blending for April fell 3.5¢ to a rounded $1.64/gal.

The Brent crude contract for May on London’s ICE was down $1.28 to $55.08/bbl. The Brent June contract declined $1.29 to $55.37/bbl. Gas oil closed at $484/tonne, down $12.75.

The average price for OPEC’s basket of benchmark crudes on Mar. 2 was $53.69/bbl, down 42¢.

Contact Paula Dittrick at [email protected].