Crude oil prices for June delivery dropped modestly on the New York market May 4, which analysts largely attributed to a lack of clear direction in trading activity pending the May 6 release of the US government’s weekly inventory report on oil and product supplies.
“The run-up in prices in our view conceals a weak underlying fundamental balance,” Bank of America Merrill Lynch analysts said, adding US light, sweet crude prices could dip to $50/bbl in September and recover to $57/bbl by Dec. 31.
Analysts and some producers say shale production can continue to rise at $50/bbl in the sweet areas within some unconventional plays, adding that operating costs are coming down through efficiency and service companies are discounting their prices.
Whiting Petroleum Corp. Chief Executive Officer James Volker expects Whiting’s overall production to grow 6% this year despite a 50% cut in Whiting’s 2015 budget. Volker cited continued advances in technology and well-completion designs during a first-quarter earnings call last week.
He said Whiting’s Bakken and Three Forks wells in the sweet spots of the central, eastern, and southern Willison basin can make money at $50/bbl oil.
The June crude oil contract on the New York Exchange June crude oil contract dropped 22¢ on May 4 to $58.93/bbl. The July contract for NYMEX oil declined 20¢ to settle at $60.16/bbl.
The natural gas contract for June was up 4.5¢ to close at $2.82/MMbtu. The Henry Hub, La., gas price was $2.72/MMbtu, up 5¢.
Heating oil for June edged down less than a penny to remain at a rounded $1.98/gal on May 4. The price for reformulated gasoline stock for oxygenates blending for June declined 1.1¢ to a rounded $2.03/gal.
The June ICE contract for Brent crude moved down 1¢ to $66.45/bbl, while the July contract settled unchanged from the previous trading session at $67.23/bbl. The ICE gas oil contract for May gained $4.25 to $604/tonne.
The average price for the OPEC’s basket of 12 benchmark crudes for May 4 was $62.85/bbl, up 62¢.
Contact Paula Dittrick at firstname.lastname@example.org.
*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.