MARKET WATCH: Crude oil prices rebound on volatile New York, London markets

US light, sweet crude oil prices and Brent crude oil prices regained some strength Apr. 9 after both plunged by more than $3.50/bbl the previous day on a volatile market for the week while many traders anticipate a recovery for crude oil although the timing of the recovery is uncertain.

Jim Ritterbusch, president of Ritterbusch & Associates advisory firm in Chicago, said many oil buyers believe the dropping US rig count will slow production and balance the market. Meanwhile, Baker Hughes Inc. was scheduled to release a rig count report on Apr. 10.

Economist Karr Ingham has said he expects the rig count in Texas will continue drifting downward for another 6 months at least. Ingham analyzes data for the Texas Alliance of Energy Producers. Ingham has noted that the oil price declines of 2008-09 were not as prolonged as the current downturn, yet the 2008-09 downturn resulted in a 9-month slide in the rig count for Texas.

Houston investment banker Simmons & Co. International has called the growth of US crude oil inventories unsustainable. Unconventional plays in both US and Canada have contributed to robust production.

Oil and gas consultant Rystad Energy forecasts about a 30% decrease in the total 2015 upstream activity in the Canadian tight oil and shale gas plays compared with 2014 upstream activity.

Regarding production levels, industry likely will mainly see the consequences in 2016 as a result of cost cuts made during 2015, Rystad Energy said in a note, adding that it expects 2015 Canadian shale production to be 16% higher compared with 2014.

“There are only a handful of companies active in Canadian shale that are expected to realize a positive free cash flow from their shale operations in 2015,” Rystad Energy said.

The Wall Street Journal on Apr. 10 reported crude oil prices have moved more than 2% up or down on 42 trading days so far this year, which is more than the number of days for such moves in any of the last 3 years.

Energy prices

The New York Mercantile Exchange May crude oil contract rose 37¢ on Apr. 9 to $50.79/bbl. The June contract climbed 62¢ to $52.49/bbl.

The natural gas contract for May dropped 9¢ to a rounded $2.53/MMbtu. The Henry Hub, La., gas price on Apr. 9 was down 4¢ to $2.63/MMbtu.

Heating oil for May delivery rose a rounded 3¢ to a rounded $1.73/gal. The price for reformulated gasoline stock for oxygenates blending for May was up 2¢ to a rounded $1.76/gal.

The May ICE contract for Brent crude climbed by $1.02 to $56.57/bbl, while the June contract was up by $1 to $57.69/bbl. The ICE gas oil contract for April dropped 75¢ to $528.25/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was $53.52/bbl on Apr. 9, down 76¢.

Contact Paula Dittrick at paulad@ogjonline.com.

*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.

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