MARKET WATCH: NYMEX crude oil prices drop back below $50/bbl

Light, sweet crude oil prices settled below $50/bbl on Mar. 9 for the first time since December when members of the Organization of Petroleum Exporting Countries and other major producers struck a deal to curb oil output.

Light, sweet crude oil prices settled below $50/bbl on Mar. 9 for the first time since December when members of the Organization of Petroleum Exporting Countries and other major producers struck a deal to curb oil output.

Traders and market observers are dwelling on persistent oversupply sustained by rising US crude oil production and inventories, the latter of which have climbed to record levels after a consecutive 9 weeks of increases, according to data from the US Energy Information Administration (OGJ Online, Mar. 9, 2017).

The same EIA report indicated US crude production is continuing to rise. During the week ended Mar. 3, output gained 56,000 b/d to 9.088 million b/d, with 46,000 b/d coming from the Lower 48 and the remaining 10,000 b/d from Alaska.

In its Short-Term Energy Outlook released earlier this week, the agency raised its forecast US crude production for 2017 by 200,000 b/d to 9.2 million b/d (OGJ Online, Mar. 7, 2017).

The higher forecast reflects improvements to forecasting methodology for rig efficiencies and an expectation of a more-rapid increase in drilling and completion activity, particularly in the Permian basin. The latest Baker Hughes Inc. tally of active rigs in the US is scheduled for release at noon on Mar. 10.

Meanwhile, working gas in US storage as of Mar. 3 was 2.295 bcf, a net decrease of 68 bcf from the previous week’s total, EIA said. Stocks were 192 bcf less than last year at this time and 363 bcf above the 5-year average of 1.932 bcf.

Energy prices

The crude oil contracts for both April and May deliveries on the New York Mercantile Exchange dropped $1 on Mar. 9 to $49.28/bbl and $49.83/bbl, respectively.

The natural gas price for April rose 7.3¢ to a rounded $2.97/MMbtu. The Henry Hub cash gas price closed at $2.83/MMbtu, jumping 14¢.

Heating oil for April fell 2.72¢ to a rounded $1.53/gal. Reformulated gasoline stock for oxygenate blending for April dropped 2.83¢ to a rounded $1.62/gal.

The Brent crude contract for May on London’s ICE declined 92¢ to $52.19/bbl. The Brent June contract dropped 91¢ to $52.46/bbl. Gas oil for March closed down $23 at $459.50/tonne.

The average price for OPEC’s basket of benchmark crudes on Mar. 9 was $50.82/bbl, falling $1.87.

Contact Matt Zborowski at matthewz@ogjonline.com.

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