Oil prices rose on the New York and London markets May 14, supported by signs that major oil producers remain committed to reducing world oil supply and awaiting clarification on how renewed US sanctions against Iran will affect world oil supply.
“The Saudis are signaling that they would be relaxed with the scenario in which they temporarily overtighten the market,” said Paul Horsnell, the head of commodity research at Standard Chartered. “Coupled with no signs of new supply coming on, demand remaining strong as well as the geopolitical turmoil in Iran and you have the conditions for this push up towards $80/bbl,” he said of Brent crude prices.
The Organization of Petroleum Exporting Countries and other major producers are scheduled to meet in Vienna in June to discuss production-cut targets, imposed to help strengthen oil prices.
Turmoil across Yemen and Syria also supports oil prices. JP Morgan analysts suggest that oil exports from Iran could fall 500,000 b/d. The reduced imports are expected to start with Asia, particularly South Korea and Japan.
“We don’t expect China to reduce its imports of crude from Iran given their long-term signed contracts and the ability to pay in yuan,” said Abhishek Deshpande, the head of oil market research & strategy at JP Morgan.
In its Monthly Oil Market Report released May 14, OPEC raised its world oil demand forecast for 2018 by 25,000 b/d to increase by 1.65 million b/d and average 98.85 million b/d.
Energy prices
The June light, sweet crude contract on the New York Mercantile Exchange gained 26¢ on May 14 to settle at $70.96/bbl. The July price was up 31¢ to $70.99/bbl.
The NYMEX natural gas price for June gained 3.6¢ to settle at a rounded $2.84/MMbtu. The Henry Hub cash gas price was $2.83/MMbtu on May 14, up 8¢.
Ultralow-sulfur diesel for June increased nearly 3¢ to settle at a rounded $2.25/gal. The NYMEX reformulated gasoline blendstock for June gained 1¢ to $2.20/gal.
Brent crude oil for July increased $1.11 to settle at $78.23/bbl on London’s International Commodity Exchange. The August contract was up $1.05 to $77.99/bbl. The gas oil contract for June was $681/tonne, up $3.50.
OPEC’s basket of crudes was $74.22/bbl for May 15, down 20¢.
Contact Paula Dittrick at [email protected].
