Light, sweet crude oil prices for May delivery edged up 2¢ to stay above $38/bbl on Mar. 31 awaiting release of the weekly rig count on Apr. 1 from Baker Hughes Inc., and prices dropped in early Apr. 1 trading on news reports of Saudi comments about the proposed production freeze by some producers.
Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman told Bloomberg during an interview that the kingdom only will freeze its oil output if Iran and other major producers also agree to do the same. Iran already has said it intends to ramp up oil production and exports.
An Apr. 17 meeting is scheduled in Qatar for major producers to discuss a proposal to freeze production at January levels. Qatar Minister of Energy and Industry Mohammed Bin Saleh al-Sada said so far a dozen countries indicated they will participate.
Participants are expected to include representatives of the Organization of Petroleum Exporting Countries and non-OPEC producers.
Helima Croft, head of commodity strategy for RBC Capital Markets, issued a report saying, “There are five sovereign producers that are on the precipice of a major crisis amid the current low oil prices.” In alphabetical order, those five were listed as Algeria, Iraq, Libya, Nigeria, and Venezuela.
She said the “fragile five” already faced political and security issues before oil prices plunged.
ABN AMRO energy analyst Hans van Cleef issued an Energy Monitor April report in which he forecast both Brent and US light, sweet crude will average $50/bbl in 2016 and $60/bbl in 2017.
“We think that commercial considerations will prompt US oil producers to rein in output and thus restore equilibrium to the market,” van Cleef said. “Due to the lack of investments in the oil sector, supply is certain to come under pressure in the coming months and years. The biggest risk is that underinvestment might affect production growth.”
Separately, the Wall Street Journal surveyed 13 investment banks regarding oil price expectations. Those banker forecast Brent will average $40/bbl this year while the US light, sweet crude benchmark will average $39/bbl.
“Current global fundamentals are still bearish due to the massive oversupply,” Mike Wittner, head of oil research at Societe Generale, told WSJ.
The NYMEX natural gas contract for May fell nearly 4¢ to a rounded $1.96/MMbtu. The Henry Hub gas price went the opposite direction, climbing 9¢ to $1.93/MMbtu.
Heating oil for April delivery was up 2.5¢ to $1.18/gal. The price for reformulated gasoline stock for oxygenates blending for April fell 1¢ to a rounded $1.43/gal on Mar. 31.
The Brent crude contract for May on London’s ICE rose 34¢ to $39.60/bbl. The June contract was up 28¢ to $40.33/bbl. The ICE gas oil contract for April was $355/tonne on Mar. 31, up $4.75.
The average price for OPEC’s basket of 12 benchmark crudes was $34.33/bbl on Mar. 31, down 58¢.
Contact Paula Dittrick at email@example.com.