MARKET WATCH: NYMEX oil prices slump on high crude inventory, OPEC meeting

US light, sweet crude oil prices dropped more than $1/bbl on the New York market June 3 to settle below $60/bbl pending a highly anticipated June 5 meeting of the Organization of Petroleum Exporting Countries.

The US Energy Information Administration estimated US commercial crude oil inventories, excluding the Strategic Petroleum Reserve, declined 1.9 million bbl for the week ended May 29, putting the inventory at 477.4 million bbl as of May 29 (OGJ Online, June 3, 2015).

Crude inventories remain near levels not seen for this time of year in at least 80 years, the agency said in its Petroleum Status Report.

In its weekly report on natural gas kept in underground storage across the Lower 48, EIA estimated gas in storage at 2.23 tcf as of May 29, marking a net increase of 132 bcf from the previous week. Stocks were 751 bcf higher than last year at this time and 22 bcf above the 5-year average of 2.21 tcf, said EIA in its Gas Storage Report released on June 4.

Early comments from OPEC delegates gathering in Vienna appear to indicate the cartel likely will keep its production quota at 30 million b/d even though it’s widely accepted that OPEC is producing more than that target.

Kuwait Oil Minister Ali al-Omair said he “strongly believes” OPEC members support keeping the cartel’s production ceiling unchanged.

Speaking to KUNA news agency in Vienna, Omair said, “The global scene requires us to not take a decision that may negatively impact the market, and the options available for OPEC are either to maintain or increase [the] production ceiling.”

Saudi Oil Minister Ali al-Naimi said earlier in the week that OPEC’s strategy of maintaining its production quota to safeguard market share was successful.

“Demand is picking up. Supply is slowing. This is a fact,” he told reporters. “The market is stabilizing.”

At its November 2014 meeting, OPEC maintained its 30 million b/d production quota.

Energy prices

The July crude oil contract on the New York Mercantile Exchange fell $1.62 on June 3 to settle at $59.64/bbl. The August contract declined $1.59 to settle at $59.93/bbl.

The natural gas contract for July dropped 6¢ to a rounded $2.63/MMbtu. The Henry Hub, La., gas price gained 2¢ to $2.64/MMbtu.

Heating oil for July was down 5¢ to a rounded $1.89/gal. The price for reformulated gasoline stock for oxygenates blending for July declined by nearly 2¢ to a rounded $2.04/gal.

The July ICE contract for Brent crude declined $1.69 to $63.80/bbl while the August contract fell $1.66 to $64.54/bbl. The ICE gas oil contract for June was down $10.50 to $585.50/tonne.

The average price for OPEC’s basket of 12 benchmark crudes for June 3 was unavailable pending preparations for the June 5 meeting.

Contact Paula Dittrick at

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

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