Light, sweet crude prices dropped moderately on the New York market May 13, holding above $46/bbl after a volatile week. Meanwhile, analysts appeared somewhat optimistic about the possibility of $50/bbl oil later this year.
Ole Hansen, Saxo Bank head of commodity strategy, said oil prices rose on temporary supply disruptions caused by wildlife in Canada and pipeline outages in Nigeria.
“The slowdown in US production remains price sensitive,” Hansen said. “As West Texas Intermediate crude oil (for calendar 2017) trades within a whisker of $50/bbl, the potential for a fading production slowdown would upset current expectations of when the market will rebalance.”
Hansen sees a crude oil market rebalance under way, primarily supported by gradually slowing US unconventional production and multiple, temporary supply disruptions.
“WTI crude oil is currently trading within a $43-47/bbl range,” Hansen said, adding the range for Brent crude is $43.50-48/bbl.
“A bumpy road ahead is the only guarantee oil markets can provide at this stage,” Hansen said. “Oil prices will eventually recover in order to attract renewed investments and drilling activity. For now, the timing of when supply and demand finally cross remains the big unknown.”
Separately, Goldman Sachs Group Inc. analysts said on May 15 that supply outages combined with strong demand from China and India could help reduce high crude inventories worldwide.
Goldman forecast US oil futures could rise to $50/bbl in this year’s second half and reach $60/bbl by yearend 2017. That compared with an April forecast in which Goldman forecast oil trading at $40-45/bbl during the second half.
The NYMEX natural gas contract for June delivery fell nearly 6¢ to a rounded $2.10/MMbtu. The Henry Hub price was $1.95/MMbtu, down 5¢.
Heating oil for June delivery gained nearly a penny to $1.40/gal. The price for reformulated gasoline stock for oxygenates blending for June gained 0.5¢ to a rounded $1.59/gal.
The Brent crude contract for July on London’s ICE fell 25¢ to $47.83/bbl. The August contract fell 28¢ to $48.14/bbl. The June gas oil contract gained to reach $418.75/tonne, up $7.75.
The Organization of Petroleum Exporting Countries basket of crudes price for May 13 was unavailable because the Secretariat office was closed May 16.
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