MARKET WATCH: NYMEX, Brent crude prices gain despite world oil oversupply concerns

Crude oil prices gained modestly on markets in New York and London on May 5 after having dropped sharply the previous day and for the week overall, dipping to the lowest level since November 2016. Analysts blamed the price drop on concerns about lingering world oil oversupply.

Crude oil prices gained modestly on markets in New York and London on May 5 after having dropped sharply the previous day and for the week overall, dipping to the lowest level since November 2016. Analysts blamed the price drop on concerns about lingering world oil oversupply.

The Organization of Petroleum Exporting Countries and other major producers, including Russia, agreed to cut production by 1.8 million b/d in the first half of the year to help reduce global stocks and support prices. OPEC’s share of the cuts is 1.2 million b/d.

Saudi Arabia’s Energy Minister Khalid Al-Falih said May 8 that he was confident that OPEC will decide to extend production-cut targets into the second half. OPEC meets on May 25 in Vienna.

OPEC members’ crude output stayed unchanged in April compared with March at 31.85 million b/d for members participating in the cuts, according to an S&P Global Platts survey. OPEC showed high compliance. Production increases in Angola and Nigeria were offset by declines from Libya and Iraq.

“An extension to the production-cut agreement is far from a done deal, with many details to be negotiated, including cut levels, exemptions, and duration amid an increasingly skeptical market,” said Herman Wang, S&P Global Platts OPEC specialist. “OPEC still has much to discuss.”

Separately, China’s April crude imports rose 5.6% compared with the same period a year ago, Chinese customs data showed May 8.

“Importing an average of 8.5 million b/d between January and April, China has overtaken the US as the world’s largest crude oil importer,” Commerzbank analysts said in a research note.

Energy prices

The light, sweet contract for June crude oil delivery gained 70¢ to close at $46.22/bbl on the New York Mercantile Exchange on May 5. The July contract also rose 70¢ to $46.60/bbl.

The natural gas price for June was up 8¢ to a rounded $3.26/MMbtu. The Henry Hub cash gas price held at $3.07/MMbtu on May 5, unchanged from May 4.

Heating oil for June rose 2¢ to $1.43/gal. Reformulated gasoline stock for oxygenate blending for June gained 2¢ to a rounded $1.50/gal.

The Brent crude contract for July on London’s ICE climbed 72¢ to settle at $49.10/bbl. The August contract increased 76¢ to $49.48/bbl. The May gas oil contract rose $7.75 to $433.75/tonne.

OPEC’s basket of crudes was $46.56/bbl on May 5, down 88¢.

Contact Paula Dittrick at paulad@ogjonline.com.

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