The latest Chinese manufacturing data supported crude oil prices. The preliminary HSBC China Manufacturing Purchasing Managers Index edged up to 49.1 in May from 48.9 in April. China’s economic statistics are watched by traders and analysts because China is the world’s second-largest oil consumer.
Regarding US natural gas prices, Barclays Research analysts said that despite a rally this week, the overall fundamentals still point to a well-supplied market.
“A fact that should continue to put a ceiling on prices,” Michael Cohen of Barclays said. “With cooler weather expected and power producers switching to cheaper coal thanks to the recent gas gains, we continue to see prices drifting downward through this quarter, averaging $2.45/MMbtu.”
Gas prices reached $3.10/MMbtu on May 19, a 4-month high. But the rally was short. Gas settled that day at $2.94/MMbtu.
“Fundamentals pointing to lower production due to maintenance events and increased expectations for gas demand in the power sector helped to spark the rally,” Cohen said. “Based on observations from the last couple years, the market should experience some of the largest storage builds of the summer during the last 2 weeks in May. This means the market will be expecting a big build heading into next week’s [gas] storage report.”
The June crude oil contract on the New York Mercantile Exchange gained $1.74 on May 21 to settle at $60.72/bbl. The July contract rose $1.68 to settle at $61.15/bbl.
The natural gas contract for June climbed 3¢ to a rounded $2.95/MMbtu. The Henry Hub, La., gas price was $2.93/MMbtu, down 6¢.
Heating oil for June rose nearly 4¢ a rounded $1.99/gal. The price for reformulated gasoline stock for oxygenates blending for June increased 4¢ to a rounded $2.08/gal.
The July ICE contract for Brent crude climbed $1.51 to $66.54/bbl while the August contract gained $1.54 to $67.06/bbl, respectively. The ICE gas oil contract for June was up $16.75 to $609.50/tonne.
The average price for the OPEC’s basket of 12 benchmark crudes for May 21 was $61.86/bbl, up 87¢.
Contact Paula Dittrick at [email protected].
*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.