MARKET WATCH: NYMEX oil dips on strengthening US dollar

Light, sweet crude oil for March delivery on the New York market fell slightly to settle below $66/bbl on Jan. 29 due in part to a strengthening dollar and continued US crude output increases.

Following declines in the US dollar for 6 weeks, the currency has strengthened 0.3% since Jan. 26 to 89.31 on the US dollar index, weighing on crude prices. Market participants will watch for a rally in the US currency following recent federal tax reforms.

US natural gas futures for March rose as “winter gas demand conditions have been impressive and should continue to impress,” said Seaport Global Securities analysts in a Jan. 29 investor note. Noting the rally, supplies of Permian gas are to be considered.

“It is possible that end-of-season working gas could descend to about 30% below the trailing 5-year average, or closer to about 1.1 tcf. While some of this justifies a moderately higher price adjustment for major gas price benchmarks, we are getting closer to March and April contracts where things could slip lower very quickly. Trading action in El Paso Permian futures suggests a period of severe regional oversupply in the April-June period of 2019. This might be a year from now, but this could weigh upon national prices after the winter rally is concluded,” the analysts said.

Energy prices

The March light, sweet crude contract on the New York Mercantile Exchange fell 58¢ on Jan. 29 to settle at $65.56/bbl. The April contract was also down 58¢ to $65.39/bbl.

The NYMEX natural gas price for February jumped $1.26 to $3.63/MMbtu. The Henry Hub cash gas price rose 4¢ to $3.56/MMbtu.

Ultralow-sulfur diesel for February fell 7¢ to a rounded $2.07/gal. The NYMEX reformulated gasoline blendstock for February decreased 5¢ to a rounded $1.89/gal.

Brent on London’s ICE for March dropped $1.06 to $69.46/bbl. The April contract was down 95¢ to $69.20/bbl. The gas oil contract for February reached $618.25/tonne.

The Organization of Petroleum Exporting Countries’ basket of crudes was $67.60/bbl on Jan. 29, down 34¢.