MARKET WATCH: NYMEX crude oil falls slightly on stronger dollar, inventory gain

Oil prices fell slightly on the New York market May 18, erasing gains from earlier in the week but managing to stay above $48/bbl. Analysts attributed the oil price drop to a strengthening US dollar.

The dollar’s value jumped after the Federal Reserve’s April minutes indicated an interest-rate increase could come as early as June. The Wall Street Journal Dollar Index rose 0.7%. Oil trades in US dollars, and a stronger dollar makes oil more expensive for buyers using other currencies.

“With oil now at almost $50/bbl, we feel that markets have moved too high, too far, too soon,” said BNP Paribas analysts in a research note. “The much-anticipated rebalancing of the market may take more time.”

The Energy Information Administration reported US crude inventories unexpectedly rose by 1.3 million bbl to 541.3 million bbl for the week ended May 13. Refined product supplies fell as demand increased for gasoline and diesel (OGJ Online, May 18, 2016).

Total demand for refined products rose to more than 20 million b/d, the Petroleum Status Report estimated. EIA said that was the highest weekly refined-product level since January.

Regarding US production, the Petroleum Status Report said estimated crude output fell slightly for the week ended May 13 to 8.79 million b/d, down 11,000 b/d from the previous week. The US crude oil production estimate includes lease condensate and is calculated using a combination of short-term forecasts for the Lower 48 and the latest available production estimates from Alaska.

The Gas Storage Report showed natural gas levels in underground storage across the Lower 48 at an estimated 2.75 tcf as of May 13, representing a net increase of 73 bcf from the previous week. Stocks were 791 bcf higher than for the same period last year, EIA said.

Energy prices

The June crude oil contract on the New York Mercantile Exchange declined 12¢ to settle at $48.19/bbl, and the July contract was down 21¢ to $48.78/bbl.

The NYMEX natural gas contract for June delivery fell nearly 5¢ to a rounded $2/MMbtu. The Henry Hub price was $1.91/MMbtu, down 6¢.

Heating oil for June delivery gained 1.6¢ to $1.48/gal, which was the front-month contract’s highest settlement since November 2015. The price for reformulated gasoline stock for oxygenates blending for June climbed nearly 1.5¢ to a rounded $1.65/gal, which was that contract’s highest settlement since August 2015.

The Brent crude contract for July on London’s ICE was down 35¢ to $48.93/bbl. The August contract dropped 29¢ to $49.45/bbl. The June gas oil contract gained $6.75 to $443.75/tonne.

The Organization of Petroleum Exporting Countries basket of crudes price for May 18 was $44.88/bbl, up 6¢.

Contact Paula Dittrick at

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