Light, sweet crude oil prices on the New York market dropped slightly to settle below $33/bbl on Feb. 26 and appeared to be staying relatively flat in early Feb. 29 trading. Analysts suggested investors are waiting on news about a possible oil-production freeze to set price direction.
Miswin Mahesh, an oil analyst with Barclays in London, said Saudi Arabia’s oil policy has not changed from November 2014 when it decided against cutting production, but recent talks about freezing production at current levels represent “an exercise in building broader cooperation between producers and thereby is likely to prove a litmus test for building trust.”
Saudi Arabia, Russia, Venezuela, and Qatar said they would freeze production at January levels if other producers would do the same.
“In our view, the recent output freeze talks are unlikely to have any immediate impact on market balances,” Mahesh said. “Over the coming months, we believe there is potential for trust among producers to build through closed door negotiations. This will subsequently be put to the test on compliance.”
He forecast that a coordinated effort will materialize only if negotiations include special provisions for certain producers, such as Iran. Meanwhile, oil market fundamentals remain weak, he noted.
The NYMEX natural gas contract for April was up less than a penny to $1.79/MMbtu. The Henry Hub gas price fell 11¢ to $1.66/MMbtu.
Heating oil for March delivery declined 1.8¢ to a rounded $1.05/gal. The price for reformulated gasoline stock for oxygenates blending for March fell nearly 4¢ to a rounded $1.02/gal on Feb. 26.
The April ICE contract for Brent crude was down 19¢ to $35.10/bbl, and the May contract fell 26¢ to settle at $35.44/bbl. The ICE gas oil contract for March was $325.25/tonne, up $18.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was $30.74/bbl, up $1.55.
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