US light, sweet crude oil prices for July delivery rose modestly on the New York market May 28 but still settled under $58/bbl, and analysts said much of the market appeared to be in a holding pattern pending a June 5 meeting of the Organization of Petroleum Exporting Countries in Vienna.
Most analysts expect OPEC will maintain its production target of 30 million b/d, which would continue the cartel’s strategy set at its November 2014 meeting.
Ole Hansen, Saxo Bank head of commodity strategy, said he sees OPEC’s “strategy still firmly in place despite bottom-line pain” on oil prices.
Noting a small uptick in prices since the lows set in January, Hansen doubts that US light, sweet crude oil will rise much more than around $60/bbl this year.
Separately, Scotiabank economist Patricia Mohr in Toronto said she expects NYMEX oil prices will climb to $65/bbl by late 2015 and Brent to $70/bbl.
“Renewed US shale development could then check prices in 2016’s first half with oil expected to show a zigzag pattern over the next several years as shale output ebbs and tides. By late decade, West Texas Intermediate should return to the $75-80/bbl mark,” Mohr said.
Natural gas in underground storage across the Lower 48 was estimated at 2.1 tcf as of May 22, the US Energy Information Administration said in its weekly Gas Storage Report.
That level represented a net increase of 112 bcf from the previous week. Stocks were 737 bcf higher than last year at this time and 18 bcf below the 5-year average of a rounded 2.12 tcf.
James Williams, energy economist at WTRG Economics, said, “Unless this is a cool summer, the combination of low oil drilling and low gas drilling coupled with the fuel switching from coal has me mildly bullish on gas prices throughout the remainder of the year.”
He suggested gas prices might climb above $3/MMbtu by August or September.
The natural gas contract for July declined nearly 11¢ to a rounded $2.71/MMbtu. The Henry Hub, La., gas price dropped 5¢ to $2.77/MMbtu.
Heating oil for June was up by a penny to a rounded $1.87/gal. The price for reformulated gasoline stock for oxygenates blending for June climbed 4¢ to a rounded $1.98/gal.
The July ICE contract for Brent crude gained 52¢ to $62.58/bbl while the August contract rose 50¢ to $63.16/bbl. The ICE gas oil contract for June was down $5.50 to $570.75/tonne.
The average price for OPEC’s basket of 12 benchmark crudes for May 28 was $59.33/bbl, down $1.10.
Contact Paula Dittrick at firstname.lastname@example.org.
*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.