Light, sweet crude oil prices for March delivery fell 40¢ on the New York market to settle above $29/bbl while Brent crude oil prices for April delivery dropped $1.21 to settle above $32/bbl despite an agreement by four major producers to freeze production at existing levels if other producers would do the same.
Oil prices initially rose on news of the agreement by Russia, Saudi Arabia, Venezuela, and Qatar, but within hours, traders and investors became skeptical about any widespread deal (OGJ Online, Feb. 16, 2016).
An Iranian official told the Wall Street Journal that Iran would not participate. Analysts noted the agreement hinges upon the participation of other countries, particularly Iran and Iraq.
“We have made it very clear we will return our production to its level prior to the sanctions” that had cut exports by more than 1 million b/d, the Iranian official told the WSJ. Iran is ramping up its oil exports since the lifting of nuclear-related sanctions by Western nations.
Commerzbank analysts said Iran most likely would be unwilling “to leave its oil production at the low sanction-era level…given that Tehran’s uppermost priority is to recoup the market shares it has lost.”
Goldman Sachs analysts called the oil market “directionless” and repeated their earlier statement that oil prices could bounce about near-term in the range of $20-40/bbl.
Prices remain in a slump as a result of an overabundance of world oil supplies.
Regarding US oil and product statistics, the US Energy Information Administration’s weekly Petroleum Status Report will be released on Feb. 18, a day later than normal because federal offices were closed Feb. 15 for the Presidents’ Day holiday.
The March crude oil contract on the New York Mercantile Exchange dropped 40¢ to settle at $29.04/bbl on Feb.16. The April contract dropped 94¢ to $30.97/bbl. NYMEX floor trading was closed Feb. 15 for Presidents’ Day.
The NYMEX natural gas contract for March dropped 6¢ to a rounded $1.90/MMbtu. The Henry Hub gas price was down 15¢ to $1.92/MMbtu on Feb. 16.
Heating oil for March delivery was down 4¢ to a rounded $1.03/gal. The price for reformulated gasoline stock for oxygenates blending for March dropped 7¢ to a rounded 97¢/gal on Feb. 16.
The April ICE contract for Brent crude dropped $1.21 to $32.18/bbl on Feb. 16, and the May contract dropped $1.17 to settle at $32.84. The ICE gas oil contract for March was $305.75/tonne, down $6.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was $29.35/bbl, up 91¢.
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