US light sweet crude prices dropped only a few cents on Aug. 15, setting at $47.55/bbl while Brent crude prices also slipped a few cents to settle below $51/bbl for a second consecutive day.
The US Energy Information Administration was scheduled later Aug. 16 to release its weekly oil and products report. A Wall Street Journal survey of 12 analysts and traders showed they forecast US oil inventories decreased 3 million bbl for the week ended Aug 11.
Separately, the American Petroleum Institute said its own preliminary estimate was that US crude inventories dropped by 9.2 million bbl for the week ended Aug. 11.
Ole Hansen, head of commodity trading for Saxo Bank, noted Brent prices have returned to backwardation, which means the October contract trades higher than the November contract. He said backwardation helped push Brent's premium over US light, sweet back above $3/bbl to levels not seen since December 2015.
“Investors prefer backwardation as it provides a positive roll carry on long positions,” Hansen said.
The Organization of Petroleum Exporting Countries and some non-OPEC producers have agreed to production-cut targets through first-quarter 2018.
“OPEC will struggle to clear the global [oil supply] glut any time soon with rising prices having the potential of increasing US shale oil production,” Hansen said.
Energy prices
The September light, sweet crude contract on the New York Mercantile Exchange dropped 4¢ on Aug. 15 to settle at $47.55/bbl. The October contract was down 3¢ to close at $47.70/bbl.
The NYMEX natural gas price for September dropped more than 2¢ to a rounded $2.94/MMbtu. The Henry Hub cash gas price dropped 3¢ to $2.93/MMbtu.
Heating oil for September edged down less than 1¢ to remain at a rounded $1.60/gal. Reformulated gasoline stock for oxygenate blending for September increased less than a penny to remain at a rounded $1.58/gal.
The Brent crude contract for October on London’s ICE was up 7¢ to $50.80/bbl. The November contract held steady at $50.63/bbl.
The September gas oil contract was $471.50 on Aug. 15 after the August contract expired the previous day at $483.50/tonne. OPEC’s basket of crudes on Aug. 15 was $49.45/bbl on Aug. 15, down $1.01 from the previous day.
Contact Paula Dittrick at [email protected].
