MARKET WATCH: NYMEX oil prices end volatile week at $49.80/bbl

Oil prices rose May 26 to regain partially from the previous day when prices plummeted on both the New York and London markets following an announcement that the Organization of Petroleum Exporting Countries and some non-OPEC countries extended production targets.

Oil prices rose May 26 to regain partially from the previous day when prices plummeted on both the New York and London markets following an announcement that the Organization of Petroleum Exporting Countries and some non-OPEC countries extended production targets.

The light, sweet crude oil rose 90¢ on the New York market to close at $49.80/bbl May 26 while Brent crude oil on the London market gained 69¢ to settle at $52.15/bbl.

Goldman Sachs said its analysts’ own supply-demand calculations “leave us expecting that…a 9-month extension will achieve a normalization in [Organization for Economic Cooperation and Development] inventories by early 2018, even with gradually declining compliance.”

Commerzbank said, “The question therefore is how long OPEC will be able to maintain its high level of discipline with the production cuts.”

Helima Croft, RBC Capita Markets LLC global head of commodity strategy, said the market had a “knee-jerk reaction” to the anticipated decision by an alliance of OPEC and some non-OPEC producers to extend production-cut targets through first-quarter 2018.

Croft said investors must separate “near-term, noise-driven price gyrations” from what she sees as improving global oil supply-demand fundamentals.

She believes the production-cut extension could help set a US oil benchmark floor price slightly above $50/bbl near-term. RBC’s expects light, sweet crude “to move into the mid-to-high-$60/bbl range as global balances tighten” in the second half.

Energy prices

The July light, sweet crude August contract on the New York Mercantile Exchange rose 91¢ on May 26 to close at $50.05/bbl.

The natural gas price for June gained 5¢ to a rounded $3.24/MMbtu. The Henry Hub cash gas price was $3.11/MMbtu, up 5¢.

Heating oil for June added 1¢ to a rounded $1.56/gal. Reformulated gasoline stock for oxygenate blending for June rose 3.5¢ to a rounded $1.64/gal.

The Brent crude contract for July on London’s ICE was up 69¢ to $52.15/bbl. The August contract rose 74¢ to $52.51/bbl. The June gas oil contract was unchanged at $474.50/tonne.

OPEC’s basket of crudes on May 26 settled at $49.48/bbl, down $1.76.

Contact Paula Dittrick at paulad@ogjonline.com.

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