OIL PRICES SURGED BY $1
OGJ - Light, sweet crude oil prices on the New York market and Brent crude oil prices on the London market surged by more than $1/bbl on Feb. 1 as traders and analysts shrugged off a big jump in the US oil inventory report.
Market participants apparently focused instead on a decline in US production even as oil inventories rose by more than expected.
US commercial crude oil inventories, excluding the Strategic Petroleum Reserve, increased 6.5 million bbl for the week ended Jan. 27 from the previous week, the Energy Information Administration reported Feb. 1.
Oil inventories have climbed for four consecutive weeks. The latest inventory total was 494.8 million bbl, putting oil supplies near the upper range for this time of year, EIA said.
EIA estimated US oil production at 8.915 million b/d, down 46,000 b/d for the week. The Lower 48 accounted for a decline of 45,000 b/d while Alaska production was down by 1,000 b/d.
US natural gas prices also jumped. Barclays analyst Nicholas Potter in New York said he sees "upside price potential in the second half as a hot summer presents a bull case for gas."
Barclays increased its 2017 gas price forecast, specifically weighted towards the second half. Analysts now expect the 2017 gas price will average $3.38/MMbtu compared to Barclay's previous forecast of $3.33, which it made in November 2016.
"A repeat of last summer's weather (18% warmer than normal) would result in prices having to rise into the $3.90/MMBtu levels by our estimation," analysts said. For 2018, Barclays forecast gas prices will average $3.11/MMbtu.
"Winter 2017-18 could prove tight, but we see risk to the downside as new production comes online to meet new pipelines post-first quarter," said Potter. "Recent delays in US LNG projects targeting 2018 mean the market could find itself long gas once again."
The New York Mercantile Exchange crude oil contract for March delivery gained $1.07 on Feb. 1 to $53.88/bbl. The April contract was up $1.07 to $54.49/bbl.
US natural gas futures for March delivery jumped 5¢ to a rounded $3.17/MMbtu. Gas spot prices at the Henry Hub in Cushing, Okla., reached $3.12/MMbtu, up 12¢.
Heating oil for March climbed 4¢ to a rounded $1.67/gal. Reformulated gasoline stock for oxygenate blending for March gained nearly 3¢ to a rounded $1.58/gal.
The Brent crude contract for April on London's ICE increased $1.22 to $56.80/bbl. The Brent May contract was up $1.21 to $57.12/bbl. Gas oil for February closed at $498.25/tonne, up $4.50.
The average price for the Organization of Petroleum Exporting Countries' basket of benchmark crudes on Feb. 1 was $52.76/bbl, up 55¢.
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AN - China National Offshore Oil Corp. (CNOOC) is willing to invest $3 billion in its existing oil and gas operation in Nigeria, the Nigerian National Petroleum Corporation (NNPC) said on Sunday following a meeting with the Chinese in Abuja.
REUTERS - Production at Libya’s giant Sharara oil field was expected to fall by at least 160,000 barrels per day (bpd) on Saturday after two staff were abducted in an attack by an unknown group, the National Oil Corporation (NOC) said.
IMF - Output grew by 3.8 percent in 2017, underpinned by a resilient non-hydrocarbon sector, with robust implementation of GCC-funded projects as well as strong activity in the financial, hospitality, and education sectors. The banking system remains stable with large capital buffers. Growth is projected to decelerate over the medium term.
IMF - Higher oil prices and short-term portfolio inflows have provided relief from external and fiscal pressures but the recovery remains challenging. Inflation declined to its lowest level in more than two years. Real GDP expanded by 2 percent in the first quarter of 2018 compared to the first quarter of last year. However, activity in the non-oil non-agricultural sector remains weak as lower purchasing power weighs on consumer demand and as credit risk continues to limit bank lending.