US light, sweet crude oil futures fell modestly May 1 to settle just below $49/bbl, which analysts attributed to falling gasoline prices and concerns about rising US oil production adding to an already oversupplied world crude oil market.
Recent government statistics show US refiners processing record volumes of crude oil, resulting in high gasoline inventories. Analyst say high gasoline supply levels drag down crude prices. Gasoline futures settled May 1 at the lowest front-month price since late February.
Ole Hansen, Saxo Bank head of commodity strategy, said rising gasoline stockpiles prompted many investors to sell crude oil holdings starting in late April.
The Organization of Petroleum Exporting Countries and non-OPEC countries collectively agreed to production-cut targets of 1.8 million b/d total for 6 months, starting in January. OPEC plans to consider whether to extend those production-cut targets when the cartel meets in Vienna on May 25.
“The reason OPEC tried to curtail production was because it wanted to remove the supply overhang,” said Emily Ashford, Standard Chartered director of energy research. “Until evidence comes through that the overhang is reducing then they haven’t fulfilled the requirement.”
Energy prices
The light, sweet contract for June crude oil delivery dropped 49¢ on May 1 to close at $48.84/bbl on the New York Mercantile Exchange. The July contract fell 46¢ to settle at $49.16/bbl.
The natural gas price for June decreased 6¢ to a rounded $3.22/MMbtu. The Henry Hub cash gas price held unchanged at $3.12/MMbtu on May 1.
Heating oil for June dropped nearly 2¢ to settle at $1.49/gal. Reformulated gasoline stock for oxygenate blending for May also fell 2¢ to a rounded $1.53/gal, which was the lowest gasoline futures settlement since Feb. 28.
The Brent crude contract for July on London’s ICE declined 53¢ to settle at $51.52/bbl. The August contract dropped 51¢ to $51.86/bbl. The May gas oil contract fell $6 to $448/tonne.
OPEC’s basket of crudes was $49.26/bbl on May 1, down 6¢.
Contact Paula Dittrick at [email protected].
