OIL PRICE: STILL ABOVE $54
The US Energy Information Administration's latest Drilling Productivity Report forecasts crude output from the seven major US onshore producing regions to increase 124,000 b/d month-over-month in May to average 5.193 million b/d .
The Permian is expected to rise 76,000 b/d during the month to 2.362 million b/d, while the neighboring Eagle Ford is projected to gain 39,000 b/d to 1.216 million b/d.
"The battle between the 'sheiks and the shale oil producers' is far from decided," Commerzbank analysts said in a research note. A pact among members of the Organization of Petroleum Exporting Countries and several major non-OPEC producers to rebalance the global oil market by collectively curbing output by 1.8 million b/d is set to expire at the end of June.
OPEC will evaluate whether or not to continue the agreement into the second half during a May 25 meeting in Vienna. If the deal is continued and inventories drop as a result, Citi analysts see oil prices moving "above $60/bbl by the second half of the year," according to a research note.
If the agreement isn't extended, prices could drop "precipitously lower," they said.
The crude oil contract for May delivery on the New York Mercantile Exchange fell 53¢ on Apr. 17 to close at $52.65/bbl. The June contract lost 49¢ to $53.11/bbl.
The natural gas price for May declined 6.4¢ to a rounded $3.16/MMbtu. The Henry Hub cash gas price closed Apr. 17 at $3.06/MMbtu, up 8¢.
Heating oil for May decreased 1.66¢ to a rounded $1.63/gal. Reformulated gasoline stock for oxygenate blending for May dropped 1.53¢ to a rounded $1.72/gal.
The Brent crude contract for June on London's ICE also declined 53¢, settling at $55.36/bbl. The July contract was down 49¢ to $55.88/bbl. The gas oil contract for May lost 25¢ at $497.75/tonne.
The average price for OPEC's basket of benchmark crudes on Apr. 17 was $52.94/bbl, down 43¢.
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