MARKET WATCH: Oil prices drop pending US inventory report

Light, sweet crude oil prices dropped more than 80¢/bbl on the New York market Feb. 7 for a second consecutive day and prices continued to drop in early Feb. 8 trading in advance of the weekly US oil and products inventory report from the US Energy Information Administration.

Light, sweet crude oil prices dropped more than 80¢/bbl on the New York market Feb. 7 for a second consecutive day and prices continued to drop in early Feb. 8 trading in advance of the weekly US oil and products inventory report from the US Energy Information Administration.

Analysts and traders surveyed by The Wall Street Journal in advance of EIA’s report forecast that US crude inventories rose 2.5 million bbl for the week ended Feb. 3. Separately, data from the American Petroleum Institute showed US crude oil supplies rose 14.2 million bbl for the week ended Feb. 3.

The Organization of Petroleum Exporting Countries and other major producers started production cuts in January. US rig counts and production, meanwhile, is climbing.

Commerzbank analysts estimate the US is producing nearly 9 million b/d. EIA estimated US production as of Jan. 27 at 8.915 million b/d. EIA has forecast 2017 US production will reach 8.98 million b/d.

BP PLC is considering ways to increase US unconventional oil and gas production, BP Chief Executive Officer Bob Dudley told analysts Feb. 8 after BP reported its earnings. BP said it would be cash-flow neutral if Brent prices were $60/bbl during 2017 (OGJ Online, Feb. 7, 2017).

When asked about future investments, Dudley said BP will use “a lot of discipline.”

Energy prices

The NYMEX crude oil contract for March delivery dropped 84¢ on Feb. 7 to $52.17/bbl. The April contract was down 85¢ to $52.78/bb.

US natural gas futures for March delivery gained 8¢ to a rounded $3.12/MMbtu. The spot gas price at the Henry Hub in Cushing, Okla., jumped 12¢ to $3.04/MMbtu.

Heating oil for March fell 1¢ to a rounded $1.62/gal. Reformulated gasoline stock for oxygenate blending for March dropped 2¢ to a rounded $1.49/gal.

The Brent crude contract for April on London’s ICE fell 67¢ to $55.95/bbl. The Brent May contract was down 77¢ to $55.33/bbl. Gas oil for February closed at $485.75/tonne, down $8.25.

The average price for OPEC’s basket of benchmark crudes on Feb. 7 was $52.78/bbl, down 99¢.

Contact Paula Dittrick at paulad@ogjonline.com.

More in General Interest