Crude oil prices dropped slightly on both the New York and London markets on May 31. Analysts and other market observers attributed a lull in market news to the June 2 meeting in Vienna of the Organization of Petroleum Exporting Countries.
Most analysts see little likelihood of a strategy change in OPEC production. UAE Minister of Energy Suhail Al Mazroui told reporters in Vienna on May 31 that he was content with the status of world oil markets, which he called “self-correcting.”
“We are optimistic. We are seeing that the market is correcting upward,” he said.
Crude oil outages in Nigeria and Libya, wildfires near Alberta’s oil sands, and declining US production likely “will chill any calls for OPEC production cuts,” during the June 2 meeting, said Herman Wang, senior editor of S&P Platts oil news in Washington, DC.
“Any proposals to rein in output are likely to be stymied by Iran’s intent to keep scaling up production and Saudi Arabia’s staunch insistence on not ceding market share to higher cost producers,” said Wang.
Saudi Arabia’s recently appointed Khalid al-Falih as energy minister to succeed long-serving Ali al-Naimi.
That move is widely seen “as a doubling down of the kingdom’s market share strategy, as directed by Deputy Crown Prince Mohammed bin Salman, the royal in charge of the Saudi economy,” Wang said.
“Naimi’s comments have always been closely monitored, and Falih’s surely will be, too,” Wang said. Market observers are watching to see if al-Falih talks freely with the media and what meetings he might arrange in Vienna before the OPEC meeting. In Nigeria, oil output has slumped to over 20-year lows this year because of rising militancy and sabotage of its oil pipelines and other equipment.
Nigeria’s Oil Minister Emmanuel Kachikwu “likely will face questions on how his government will manage the uprising and when it will be able to lift force majeure on loadings of key export grade Qua Iboe,” Wang said.
OPEC is expected to consider Gabon’s request to rejoin the cartel. Indonesia was readmitted to the cartel last year.
Separately, the US Energy Information Administration will release its closely watched weekly inventory on June 2, a day later than normal because of the Memorial Day holiday on May 30.
The NYMEX natural gas contract for July delivery gained nearly 12¢ to a rounded $2.29/MMbtu. The Henry Hub price was $2.09/MMbtu, up 30¢ from the May 27 trading.
Heating oil for June delivery edged up less than a penny to a rounded $1.50/gal. The price for reformulated gasoline stock for oxygenates blending for June decreased 1¢ to a rounded $1.62/gal.
The July Brent crude contract on London’s ICE dropped 7¢ to $49.69/bbl. The August contract lost 47¢ to $49.89/bbl. The June gas oil contract gained $5 to $453.50/tonne.
OPEC’s basket of crudes price for May 31 was $45.15/bbl, up 35¢.
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