MARKET WATCH: Oil prices drop, natural gas prices jump in mixed market

US light, sweet crude oil futures prices for May delivery dropped nearly $1/bbl on the New York market on Apr. 2 to settle slightly above $49/bbl while Brent crude oil prices dropped more than $2/bbl on the London market on the same day. US and European markets were closed on Apr. 3 in observance of Good Friday.
April 6, 2015
3 min read

US light, sweet crude oil futures prices for May delivery dropped nearly $1/bbl on the New York market on Apr. 2 to settle slightly above $49/bbl while Brent crude oil prices dropped more than $2/bbl on the London market on the same day. US and European markets were closed on Apr. 3 in observance of Good Friday.

US natural gas futures prices rallied on Apr. 2 after the government’s weekly natural gas storage statistics showed a bigger draw than analysts had anticipated.

The US Energy Information Administration reported on Apr. 2 that natural gas in underground storage across the Lower 48 showed a weekly decline of 18 bcf compared with analysts’ expectations of a decline of 10 bcf.

EIA estimated gas inventories at a rounded 1.47 tcf for the week ended Mar. 27. Gas inventories still remain significantly higher than last year’s levels for this same period (OGJ Online, Apr. 2, 2015).

Meanwhile, international oil market participants watched closely as the US and five other nations reached a framework agreement with Iran that is intended to deter Iran from acquiring a nuclear weapon. News of the agreement prompted immediate political debate.

In the US, Senate Republican leaders said they planned an Apr. 14 vote on legislation by Senate Foreign Relations Committee Chairman Bob Corker (R-Tenn.) to prevent President Barack Obama from lifting sanctions on Iran for 60 days.

Barclays Research analysts issued an Apr. 5 note saying the Iran agreement sets parameters geared toward reaching a final agreement by June 30.

Michael Cohen with Barclays in New York said, “The hardest part, a signed and detailed agreement, lies ahead.” He believes a final deal is achievable but that delays are likely.”

Cohen said, “Iran wants all sanctions removed when a Joint Comprehensive Plan of Action is signed,” adding that the US and other countries want verification of compliance first. “A middle ground is possible. Therefore, sanctions relief will be gradual in our view. A return of 1 million b/d of Iranian oil exports is at least a year away but 200,000-300,000 b/d of slippage is possible now that the parameters of an agreement are in place.”

Energy prices

The New York Mercantile Exchange May crude oil contract declined 95¢ on Apr. 2 to $49.14/bbl. The June contract dropped $1.15 to $50.60/bbl.

The natural gas contract for May gained 10.8¢ to a rounded $2.71/MMbtu. The Henry Hub, La., gas price on Apr. 3 was $2.59/MMbtu, down 1¢.

Heating oil for May delivery was down 6.4¢ to $1.68/gal. Reformulated gasoline stock for oxygenate blending for May declined nearly 7¢ to a rounded $1.76/gal.

The May ICE contract for Brent crude dropped $2.15 to $54.95/bbl, while the June contract was down by $2.10 to $56.09/bbl. The ICE gas oil contract for April declined $19.75 to $514/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was unavailable for Apr. 2 because the OPEC Secretariat office was closed Apr. 3-6.

Contact Paula Dittrick at [email protected].

*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.

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.

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