Light, sweet crude oil prices for March delivery fell more than $1 Feb. 19 to close at under $30/bbl on the New York market while Brent prices for April delivery also fell more than $1 to close at slightly above $33/bbl.
Prices had rallied earlier in the week after Russia, Saudi Arabia, Qatar, and Venezuela said they would freeze production at existing levels if other producers, both the Organization of Petroleum Exporting Countries and non-OPEC countries, would do the same.
But Iran refused to join, and Iran is among the countries most likely to increase production this year given that it is ramping up its oil exports following the lifting of nuclear-related international sanctions in January.
Jason Gammel, Jefferies oil analyst, said, “The key contingency—cooperation from other OPEC members—seems to preclude any real physical effect on the market.”
Still, Gammel acknowledged the proposal “offers the first glimmers of optimism of OPEC action since November 2014.”
Olivier Jakob, Petromatrix analyst, said the market continues to be swayed by talk about a proposed agreement among producing countries. He also noted that oil market players are watching the stock markets worldwide for clues about the strength of the global economy.
“With equities markets and oil, one day is leading the other. And the next, it is the other way around,” Jakob said.
The rig count decline appeared to be supporting Feb. 22 oil prices, which rose in overnight electronic trading. The light, sweet crude contract for March delivery expired on Feb. 22 on the New York market.
The NYMEX natural gas contract for March was down nearly 5¢ to a rounded $1.80/MMbtu. The Henry Hub gas price was down 6¢ to $1.81/MMbtu.
Heating oil for March delivery dropped 5¢ to a rounded $1.02/gal. The price for reformulated gasoline stock for oxygenates blending for March declined 1.3¢ to a rounded 96¢/gal on Feb. 19.
The April ICE contract for Brent crude dropped $1.27 to $33.01/bbl, and the May contract dropped $1.26 to settle at $33.62/bbl. The ICE gas oil contract for March was $307.75/tonne, down $13.50.
The average price for OPEC’s basket of 12 benchmark crudes was $29.17/bbl, down 79¢.
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