MARKET WATCH: Crude prices fall as production freeze meeting deemed unlikely

Crude oil prices on the New York and London markets hit 3-month highs on Mar. 9, but the upward momentum was quelled on Mar. 10 amid increasing doubts about action being taken among major producers to freeze output.

Light, sweet crude and Brent each settled at its highest level since Dec. 4 following release of the US Energy Information Administration’s Weekly Petroleum Status Report, which showed gasoline inventories posted a larger-than-expected drop last week (OGJ Online Mar. 9, 2016).

A report from Reuters on Mar. 10, however, indicated that a March meeting to discuss a production freeze is likely off given Iran’s apparent unwillingness to take part in a pact.

A Nigerian official previously told reporters that representatives of the Organization of Petroleum Exporting Countries are scheduled to convene in Moscow on Mar. 20 with non-OPEC producers (OGJ Online Mar. 7, 2016).

“They are not agreeing on the meeting,” an OPEC source told Reuters. “Why would the ministers meet again now? Iran says they will not do anything. Only if Iran agrees, things will change.”

UAE Energy Minister Suhail bin Mohammed al-Mazrouei said on Mar. 7 that his country has not received an official invitation to attend the meeting.

Anas al-Saleh, Kuwait’s acting oil minister, told reporters on Mar. 8 that his country will commit to a freeze only if major producers, including Iran, agree to join the pact.

“If there is an agreement, Kuwait will commit to the freeze,” he said, adding that without a freeze agreement by all producers, Kuwait will “go full power.” The country currently produces 3 million b/d, he said.

Energy prices

The April crude oil contract on the New York Mercantile Exchange gained $1.79 to $38.29/bbl on Mar. 9. The May contract rose $1.65 to $40.07/bbl.

The NYMEX natural gas contract for April was up 4¢ to a rounded $1.75/MMbtu. The Henry Hub gas price for Mar. 9 was $1.57, up 2¢.

Heating oil for April delivery increased 3.27¢ to a rounded $1.23/gal. The price for reformulated gasoline stock for oxygenates blending for April gained 8.27¢ to a rounded $1.47/gal on Mar. 8.

The Brent crude contract for May on London’s ICE gained $1.42 to $41.07/bbl. The June contract increased $1.41 to $41.65/bbl. The ICE gas oil contract for March rose $3 to $362.75/tonne.

The average price for OPEC’s basket of 12 benchmark crudes was $35.05/bbl, down 2¢.

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