MARKET WATCH: NYMEX, Brent prices hold steady awaiting results of US sanctions on Iran
Light, sweet crude prices increased modestly to settle above $71/bbl for a second consecutive day on the New York market May 10 while the Brent crude price for July also climbed on the London market to settle above $77/bbl for a second consecutive day.
Meanwhile, analysts and traders are waiting to see how new US sanctions against Iran influence Iran’s oil export levels. Lower exports could mean lower production. Iran is a member of the Organization of Petroleum Exporting Countries.
OPEC and other major producers are scheduled to meet in June to review whether they will extend production-cut targets beyond 2018. Some analysts suggest the production-cut targets could end.
Thomas Pugh, Capital Economic commodities economist, told the Wall Street Journal that, “If the reimposition of US sanctions on Iran leads to a reduction in Iran’s oil output and exports, OPEC and its allies could exit the deal at the end of the year or even sooner…to prevent a supply shortage in the oil market.”
Frank Verrastro, senior vice-president and trustee fellow with the Energy and National Security Program at the Center for Strategic and International Studies in Washington, DC, said lower Iranian oil export levels coupled with other market disruptions would result in higher oil prices.
Other potential market disruptions include hurricane-related production interruptions in Gulf of Mexico or changing world oil supplies due to political unrest in Venezuela, Nigeria, or elsewhere.
“While US oil production continues to grow, it alone is incapable—volumetrically and quality wise—of replacing large and varied supply losses elsewhere,” Verrastro said.
He said consequences to oil markets resulting from US sanctions on Iran “will unfold over months, not weeks.”
Energy prices
The June light, sweet crude contract on the New York Mercantile Exchange gained 22¢ on May 10 to settle at $71.36/bbl. The July price was up 26¢ to $71.31/bbl.
The NYMEX natural gas price for June gained nearly 8¢ to settle at a rounded $2.81/MMbtu. The Henry Hub cash gas price was $2.73/MMbtu on May 10, up 1¢.
Ultralow-sulfur diesel for June increased less than a penny to settle at a rounded $2.22/gal for a second consecutive day. The NYMEX reformulated gasoline blendstock for June gained 2¢ to a rounded $2.19/gal.
Brent crude oil for July rose 26¢ to settle at $77.47/bbl on London’s International Commodity Exchange. The August contract was up 31¢ to $77.24/bbl. The gas oil contract for June was $671/tonne, down $3.25.
The Organization of Petroleum Exporting Countries’ basket of crudes was $74.46/bbl for May 10, up 49¢.
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.