MARKET WATCH: NYMEX, Brent crude prices climb on Saudi’s support of production targets

Light, sweet crude oil for May delivery settled above $53/bbl for a second consecutive day Apr. 11 on the New York market and the Brent contract for June settled above $56/bbl in London as Saudi Arabia encouraged an extension of the production-cut targets by major oil producers.
April 12, 2017
3 min read

Light, sweet crude oil for May delivery settled above $53/bbl for a second consecutive day Apr. 11 on the New York market and the Brent contract for June settled above $56/bbl in London as Saudi Arabia encouraged an extension of the production-cut targets by major oil producers.

Oil prices had been dropping Apr. 11 but reversed direction after the Wall Street Journal reported Saudi support for a 6-month renewal of existing production targets. The Organization of Petroleum Exporting Countries meets in May. OPEC countries agreed to cut production by 1.2 million b/d, starting in January.

“We are gradually but steadily on course to seeing a return to balanced oil markets,” OPEC Sec.-Gen. Mohammad Barkindo told Reuters, adding that OPEC and non-OPEC producers seek “sustainable stability” in the market.

Some analysts also expect OPEC to extend its production-cut targets.

“We’re now in the third month of OPEC production cuts and compliance…has been surprisingly strong,” said Rory Johnston, Scotiabank commodity economist. “We believe that the combination of high [Organization for Economic Cooperation and Development] inventories, still-weak upstream investment outside the US, and recent oil-price weakness will prompt OPEC to extend their production cap through the end of the year.”

OPEC’s Monthly Oil Market Report said Saudi Arabia, Venezuela, Angola, Iran, and Kuwait all produced at or below their agreed levels while other countries missed the mark by small amounts.

Total OPEC crude oil production in March decreased by 153,000 b/d from February to average 31.93 million b/d, secondary sources estimated. Numbers varied regarding Saudi production.

Saudi’s self-reported production declined to 9.9 million b/d—the lowest level since January. But OPEC’s secondary sources said Saudi production showed a second consecutive monthly increase to nearly 10 million b/d in March compared with 9.8 million b/d in January.

Energy prices

The crude oil contract for May delivery on the New York Mercantile Exchange gained 32¢ on Apr. 11 to close at $53.40/bbl. The June contract rose 31¢ to $53.79/bbl.

The natural gas price for May dropped nearly 9¢ to a rounded $3.15/MMbtu. The Henry Hub cash gas price closed Apr. 11 at $3.98/MMbtu, down 7¢.

Heating oil for May was up less than 1¢ to remain at a rounded $1.65/gal. Reformulated gasoline stock for oxygenate blending for May fell a fraction of a penny to remain at a rounded $1.76/gal.

The Brent crude contract for June on London’s ICE gained 25¢ to $56.23/bbl. The July contract was up by 28¢ to $56.60/bbl. The gas oil contract for May settled at $494.50/tonne. The April gas oil contract expired Apr. 10 at $493.50/tonne.

The average price for OPEC’s basket of benchmark crudes on Apr. 11 was up 23¢ to $53.36/bbl.

Contact Paula Dittrick at [email protected].

About the Author

Paula Dittrick

Senior Staff Writer

Paula Dittrick has covered oil and gas from Houston for more than 20 years. Starting in May 2007, she developed a health, safety, and environment beat for Oil & Gas Journal. Dittrick is familiar with the industry’s financial aspects. She also monitors issues associated with carbon sequestration and renewable energy.

Dittrick joined OGJ in February 2001. Previously, she worked for Dow Jones and United Press International. She began writing about oil and gas as UPI’s West Texas bureau chief during the 1980s. She earned a Bachelor’s of Science degree in journalism from the University of Nebraska in 1974.

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