THEY ROCK THE MARKETS
US light, sweet crude oil prices gained more than $1/bbl on the New York market Feb. 25 while Brent crude oil prices jumped by nearly $3/bbl on the London market on comments from Saudi Arabia Oil Minister Ali al-Naimi that world oil demand was increasing.
"Why do you want to rock the markets? The markets are calm. Demand is growing," al-Naimi told reporters in Jazan, Saudi Arabia.
The Organization of Petroleum Exporting Countries, of which Saudi Arabia is the biggest producer, decided in November 2014 to maintain its output quota for cartel members.
Brent crude oil prices settled at above $61/bbl on Feb. 25 upon the Saudi comments and following an index report showing an increase in China's manufacturing activity.
Simon Wardell, Global Insight analyst, said OPEC is looking for a sustainable floor price for Brent crude in this downcycle.
"I think they are indicating that we are not that far off the floor in the current price," Wardell told Reuters news service.
Separately, Commerzbank issued a note saying, "It remains to be seen whether this price level will be enough to ensure that sufficient non-OPEC oil supply is removed from the market."
Analysts noted the Feb. 25 rise in US oil future prices appeared to have been tempered by record US oil and product supplies.
The Energy Information Administration estimated an 8.4-million-bbl jump in commercial crude oil inventories, excluding the Strategic Petroleum Reserve, for the week ended Feb. 20 compared with the previous week. Total inventory was 435.1 million bbl, the weekly petroleum status report said Feb. 25.
On Feb. 26, EIA issued its weekly gas storage report estimating a rounded 1.94 tcf in underground storage across the Lower 48 as of Feb. 20, which was a net decline of 219 bcf from the previous week.
Stocks were 576 bcf higher than for the same period last year and 30 bcf below the 5-year average, the weekly gas storage report said.
The New York Mercantile Exchange April crude oil contract was up $1.71 to $50.99/bbl Feb. 25 while the May contract climbed $1.93 to $52.76/bbl.
The natural gas contract for March edged down less than a penny to a rounded $2.89/MMbtu. The Henry Hub, La., gas price was $3.19/MMbtu, up 7¢.
Heating oil for March rose 7¢ to a rounded $2.103/gal. Reformulated gasoline stock for oxygenate blending for March delivery climbed a rounded 10¢ to a rounded $1.72/gal.
The April ICE contract for Brent crude oil jumped $2.97, settling at $61.63/bbl. The May contract was up $2.91 to $62.35/bbl. The ICE gas oil contract for March gained 50¢ to $579.75/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 12 benchmark crudes on Feb. 25 was $53.81/bbl, up 27¢.
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