MARKET WATCH: US crude oil prices follow equity markets down
Oil futures prices eased May 24 on both London and New York markets. Light, sweet oil prices followed a fall in US equity markets after US President Donald Trump’s announcement calling off a summit with North Korea.
Analysts also said oil prices fell upon suggestions that major producers could release more crude onto the market.
Brent crude for July ended a 3-day gaining streak to fall $1.01 to $78.79/bbl on London’s ICE Futures exchange. On the New York Mercantile Exchange, the light, sweet crude oil contract for July fell $1.13, marking the biggest single-day drop in more than a month.
Russian Oil Minister Alexander Novak said May 24 that Russia and other large producers would discuss production-cut targets during a June meeting in Vienna of the Organization of Petroleum Exporting Countries.
Russian news agency RIA reported Novak plans to talk with Saudi Arabia oil officials and other OPEC members about a “gradual output recovery.”
OPEC and other major producers, including Russia, are complying with a production-cut agreement scheduled to expire Dec. 31.
The group has withheld 1.8 million b/d since Jan. 1, 2017, compared with late-2016 production levels. But some producers are questioning if the cuts are still needed because Brent crude prices recently climbed toward $80/bbl.
Moty Kuperberg, director of oil and gas for Dynamic Shipping Services Ltd., in Haifa, Israel, said he considers $60-70/bbl for Brent to be a safe level for the global economy. He finds no market fundamentals to consistently support higher crude prices.
“Oil and gas supply must not be allowed to break a certain cap on oil prices, certainly not to get any closer to the $80/bbl,” Kuperberg told OGJ.
Meanwhile, US oil and equity markets were rattled on May 24 after Trump called off a meeting with North Korean leader Kim Jong Un, citing “open hostility” from the North Korean regime and saying US officials are considering dozens of sanctions on North Korea.
Trump made the announcement without first informing allies, including South Korean President Moon Jae-in, who recently visited Washington, DC.
Energy prices
The July light, sweet crude contract on the New York Mercantile Exchange fell $1.13 to settle at $70.71/bbl on May 24. The August price was down $1.13 to $70.58/bbl.
The NYMEX natural gas price for June increased less 2.6¢ to a rounded $2.94/MMbtu. The Henry Hub cash gas price gained 1¢ to $2.87/MMbtu on May 24.
Ultralow-sulfur diesel for June dropped 2.3¢ to a rounded $2.27/gal. The NYMEX reformulated gasoline blendstock for June fell 2.6¢ to settle at a rounded $2.23/gal.
Brent crude oil for August was down $1.01 to $78.83/bbl on London’s International Commodity Exchange. The gas oil contract for June was $698.75/tonne, down $1.75.
OPEC’s basket of crudes was $76.62/bbl on May 24, up 19¢.
Contact Paula Dittrick at [email protected].
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.
