Oil prices dropped more than $1/bbl on the New York market Jan. 22 on a bigger-than-expected jump in US oil supplies, and traders on Jan. 23 said news of Saudi Arabia King Abdullah’s death brought uncertainty regarding future US-Saudi relations.
In early Jan. 23 trading, oil prices rebounded. The new king is the late king’s half-brother, Salman bin Abdul Aziz, who is less well known. US President Barack Obama offered condolences and cited “strength of our partnership” with Saudi Arabia.
Ole Hansen, head of commodity trading with Saxo Bank, noted that in overnight trading crude oil prices rose in Asia from the weakest close in almost 5 years on the news of King Abdullah’s death.
“His successor, King Salmon, is 79 years old and will most likely be viewed as a transitional figure,” Hansen said. “From an oil-market perspective the big focus is now whether its oil minister [Ali I. Al-Naimi] who has been in the job since 1995 will continue.” Hansen believes a change in oil price policy at this stage is “highly unlikely.”
On Jan. 22, the Energy Information Administration issued its petroleum status report showing that the oil and product supply jumped by 10.1 million bbl for the week ended Jan. 16 to 397.9 million bbl total, the highest January level on record in weekly EIA data going back to August 1982.
Both US light, sweet crude and Brent settled near the 6-year lows they reached last week after the inventory report.
The natural gas contract for February was down nearly 14¢ to a rounded $2.83/MMbtu. During Jan. 22 trading, NYMEX gas prices briefly fell to $2.80/MMbtu before rallying to settle higher. The EIA reported storage levels fell by 216 bcf for the week ended Jan. 16. Gas in underground storage across the Lower 48 was estimated at 2.6 tcf, EIA said in its weekly gas storage report released Jan. 22.
Stocks were 199 bcf higher than last year at this time and 153 bcf below the 5-year average of 2.79 tcf, EIA said. Meanwhile, the cash gas price at Henry Hub, La., was $2.93/MMbtu on Jan. 22, down 1¢.
Heating oil for February edged down by less than 1¢ to remain at a rounded $1.64/gal. Reformulated gasoline stock for oxygenate blending for February was up by less than 1¢ to a rounded $1.33/gal.
The March ICE contract for Brent crude oil fell 51¢ to settle at $48.52/bbl. The April contract fell 47¢ to $46.69/bbl. The ICE gas oil contract for February was up $3.75 to $474.25/tonne.
The average price for OPEC’s basket of 12 benchmark crudes on Jan. 22 was $43.05/bbl, down 20¢ from the previous day.
Contact Paula Dittrick at firstname.lastname@example.org.
*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.