Crude oil prices climbed 66¢ on the New York market to settle at $38.50/bbl on Mar. 11 after a few positive reports on the world oil supply possibly showing signs of lessening. Light, sweet crude prices ended the week up 7.2%, marking their fourth consecutive weekly gain.
Prices rose on both the New York and the London markets Mar. 11 following a report from the International Energy Agency. “There are signs that prices may have bottomed out,” said IEA’s Oil Market Report for March (OGJ Online, Mar. 11, 2016).
The Paris-based agency cited several factors, including supply outages in Iraq, Nigeria, and the UAE; signs that supply outside the Organization of Petroleum Exporting Countries is falling; no reduction in the agency’s demand growth forecast; and recent US dollar weakness compared with other currencies.
Crude production from Iraq, Nigeria, and the UAE fell 350,000 b/d in February, IEA said. “Meanwhile, Iran’s return to the market has been less dramatic than the Iranians said it would be. In February, we believe that production increased by [220,000 b/d] and, provisionally, it appears that Iran’s return will be gradual.”
Regarding the prospect of a production freeze agreement among major producers, IEA said, “We cannot know what this might be and in any event it is rather unlikely that an agreement will affect the supply-demand balance substantially in the first half of 2016.”
Separately, Goldman Sachs Group Inc. analysts issued a research note saying the “green shoots” of a rebalancing between supply and demand appeared to be materializing.
Goldman Sachs analysts said they had increasing confidence that world crude oil supplies could begin to decline this year if oil prices remain low.
The NYMEX natural gas contract for April increased 3.4¢ to a rounded $1.82/MMbtu. The Henry Hub gas price for Mar. 11 was $1.72, gaining 2¢.
Heating oil for April delivery rose by less than a penny to remain at a rounded $1.22/gal. The price for reformulated gasoline stock for oxygenates blending for April also edged up by less than a penny to hold at a rounded $1.44/gal on Mar. 11.
The Brent crude contract for May on London’s ICE rose 34¢ to $40.39/bbl. The June contract was up 41¢ to $41.09/bbl. The ICE gas oil contract for April was $367/tonne, and the March contract expired at $362.75/tonne.
The average price for OPEC’s basket of 12 benchmark crudes was $35.62/bbl, climbing 39¢.
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