MARKET WATCH: Crude oil prices drop on climbing US oil inventory

The light, sweet crude oil contract for April dropped more than a $1.30 to settle under $62/bbl on the New York Mercantile Exchange on Feb. 28. The Brent price for April fell 85¢ on the London market to settle just under $65.80/bbl.

The US crude benchmark fell overall for the month of February, the first monthly loss since August 2017. The Feb. 28 price dip followed reports of bigger-than-expected gains in US crude storage levels.

The US Energy Information Administration reported crude inventories, excluding the Strategic Petroleum Reserve, rose by 3 million bbl for the week ended Feb. 23. Gasoline supplies increased by 2.5 million bbl (OGJ Online, Feb. 28, 2018).

EIA’s Petroleum Status Report said US oil production also increased by 13,000 b/d for the week ended Feb. 23 to 10.283 million b/d. Production across the Lower 48 was up 10,000 b/d to 9.772 million b/d while Alaska’s production was up 3,000 b/d to 511,000 b/d.

Michael Cohen of Barclays said in a recent research note that Barclays expects Brent prices will “rebase to $55-60/bbl” during the second half with US crude futures prices around $55/bbl.

Energy prices

The April light, sweet crude contract on the NYMEX fell $1.37 on Feb. 28 to settle at $61.64/bbl. The May contract dropped $1.43 to $61.47/bbl.

The NYMEX natural gas price for April fell 1.6¢ to a rounded $2.67/MMbtu. The Henry Hub cash gas price was up 1¢ to $2.61/MMbtu on Feb. 28.

Ultralow-sulfur diesel for March decreased by nearly 5¢ to a rounded $1.91/gal. The NYMEX reformulated gasoline blendstock for March fell 4.5¢ to a rounded $1.75/gal.

Brent crude oil for April settled down 85¢ to $65.78/bbl on London’s International Commodity Exchange. The May contract was down $1.79 to $64.73/bbl. The gas oil contract for March was $577/tonne, down $7.50.

The Organization of Petroleum Exporting Countries’ basket of crudes was $63.97/bbl on Feb. 28, down $1.02.

Contact Paula Dittrick at paulad@ogjonline.com.