MARKET WATCH: Oil prices climb on world crude supply concerns, geopolitics
Light, sweet crude oil prices reached a 3-year high on the New York market June 28, briefly climbing above $73.50/bbl, which analysts attributed to a steep decline in US crude supplies and US-Iranian tensions. The trading session ended with a $73.45/bbl settlement.
Officials of US President Donald Trump’s administration had urged all countries to stop importing Iranian crude oil by Nov. 4. Analysts suggest US officials might use trade tariffs against countries that did not cease buying Iranian oil.
Unilateral US sanctions against Iran are scheduled to take effect Nov. 4. CNBC reported June 28 that the US State Department has clarified its earlier comments, saying the Trump administration is “willing to work with countries that are reducing their imports on a case-by-case basis.”
India is among the countries whose oil policy is vulnerable to uncertainty about the Iran nuclear accord. Reuters reports Indian officials have asked refineries to prepare for a potentially extreme reduction or zero imports of Iranian oil to comply with US sanctions.
China and some European Union members want to maintain the international alliance agreement that allowed Iran to boost its oil sales. Sanctions were lifted in return for Iran limiting its nuclear program. Trump announced a US exit from the international deal in May.
Traders are closely watching for supply disruptions from Iran, Libya, Venezuela, and Canada. Cuts in world oil supply could offset production increases from the Organization of Petroleum Exporting Countries starting July 1.
Meanwhile, a power outage at Syncrude Canada Ltd. could leave the Mildred Lake oil sands complex shut for weeks, a spokeswoman for one of the joint venture partners told OGJ (OGJ Online, June 28, 2018).
“Syncrude is developing a comprehensive plan to assess equipment condition and safely restart operations. Based on initial assessment, it is anticipated production restart will take several weeks,” said Lisa Schmidt of public and government affairs for Imperial.
Energy prices
The August light, sweet crude contract on the New York Mercantile Exchange gained 69¢ to settle at $73.45/bbl on June 28. The August price was up 55¢ to $71.81/bbl.
The NYMEX natural gas price for August decreased nearly 4¢ to a rounded $2.90/MMbtu. The Henry Hub cash gas price dropped 3¢ to $2.97/MMbtu on June 28.
Ultralow-sulfur diesel for July increased less than 1¢ to a rounded $2.18/gal. The NYMEX reformulated gasoline blendstock for July edged down less than 1¢ to remain at a rounded $2.13/gal.
Brent crude oil for August climbed 23¢ to $77.85/bbl on London’s International Commodity Exchange. The September contract increased 15¢ to $77.61/bbl. The gas oil contract for July was $665.25/tonne, down 75¢.
The OPEC Secretariat offices will be closed June 29 and July 2.
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.