Crude oil prices on the New York and London markets dropped more than $2/bbl on Mar. 27 and fell further during early trading on Mar. 30 as the US dollar slid and nuclear talks with Iran continued. The Friday declines ended a rally amid Saudi airstrikes in Yemen that sent New York crude to a one-month high.
Iran and six world powers have until the end of Tuesday to strike a deal, and the Iranian media and those close to the talks have reported the likelihood of some sort of agreement being reached.
A possible easing of oil sanctions on Iran as a result of a deal could add to the global oil supply glut. Raymond James & Associates Inc. said in a commentary that Iran could add close to 0.5 [million b/d] by yearend 2016 if an agreement is announced.
“In the long run [2-5 years], 0.5 [million b/d] of additional supply eased in over the next 18 months would pale in comparison to the 1.7 [million b/d] of additional supply that US producers added just last year,” RJA noted.
Barclays said in a recent report that it expects the oil market to bottom out in the second quarter “and support its eventual, slow rebound in the remainder of the year.”
The removal of temporary factors holding up prices during the first quarter—such as refinery strikes and unplanned outages as well as OPEC supply disruptions—along with the presence of “heightened geopolitical risk, and a massive US crude stockbuild” will exert downward pressure on prices during the quarter.
The natural gas contract for April dropped 8.2¢ to $2.59/MMbtu. The Henry Hub, La., gas price was $2.63/MMbtu, losing 10¢.
Heating oil for April delivery lost 6.01¢ to a rounded $1.73/gal. Reformulated gasoline stock for oxygenate blending for April lost 8.37¢ to a rounded $1.80/gal.
The May ICE contract for Brent crude fell $2.78 to $56.41/bbl, while the June contract fell $2.73 to $57.28/bbl. The ICE gas oil contract for April gained $4.50 to $541/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes on Mar. 27 was $52.93/bbl, a decline of $1.62.