Oil is traded in dollars so a strengthening dollar makes oil more expensive for buyers using other currencies. The Wall Street Journal Dollar Index recently traded up 0.5%.
The US Energy Information Administration was scheduled June 15 to release its weekly oil and products inventory report.
ABN AMRO raised its Dec. 31 oil price forecast for both Brent and the US crude oil benchmarks to $65/bbl from $55/bbl. Its forecast for the average 2016 oil price remained at $50/bbl for both.
Analysts attributed an overall higher oil-price trend to market equilibrium stemming from stabilization of supply and persistent world oil demand. For 2017, ABN AMRO forecast Brent will average $70/bbl and West Texas Intermediate will average $65/bbl.
Lower oil prices tend to trigger lower production by producers outside the Organization of Petroleum Exporting Countries, which triggers a higher oil price, said Hans van Cleef, senior energy economist for ABN AMRO.
“The initial effects of the low oil price are now starting to become visible,” van Cleef said. “The lack of investments is resulting in lower oil production in several countries, such as Mexico, US, and China. But oil production is also under pressure in OPEC countries such as Nigeria and Venezuela.”
Separately, Wood Mackenzie Ltd. estimated that global upstream development spend and planned spending for 2015-20 was cut $740 billion, or 22%, since the latest oil price downturn started during 2014.
“When we include cuts to conventional exploration investment, the figure increases to just over $1 trillion,” WoodMac said in a June 15 news release.
The July crude oil contract on the New York Mercantile Exchange dropped 39¢ on June 14, settling at $48.49/bbl, the front-month’s lowest settlement since May 23. The August contract fell 46¢ to $49.06/bbl.
Natural gas for July rose nearly 2¢ to a rounded $2.60/MMbtu on NYMEX, which was the highest level for 2016. Analysts attributed that to anticipated higher US gas-fired power demand for air conditioning with the arrival of summer temperatures.
Heating oil for July delivery declined 1¢ to a rounded $1.50/gal. The price for reformulated gasoline stock for oxygenates blending for July dropped 1.5¢ to a rounded $1.52/gal.
The August Brent crude contract on London’s ICE fell 52¢ to $48.93/bbl, its lowest settlement since June 3. The September contract was also down 49¢ to $50.33/bbl. The July gas oil contract settled at $443.50/tonne on June 14, down $9.75.
OPEC’s basket of crudes price for June 14 was $45.64/bbl, down 61¢.
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