The light, sweet crude oil price for August delivery on the New York Mercantile Exchange gained modestly but stayed below $43/bbl on June 22. It was the second consecutive settlement under that price. The US oil benchmark price climbed again in early June 23 trading.
Some analysts suggested prices gained on the chance that US production growth and crude inventory levels might show a weekly decline next week. Some Gulf of Mexico production was shut in as Tropical Storm Cindy approached, coming ashore in Louisiana on June 22.
The US Bureau of Safety and Environmental Enforcement said operator reports showed 288,186 b/d of oil, 16.5% of current gulf production, was shut in while a rounded 440 MMcfd—less than 1% of natural gas production—was affected.
Baker Hughes Inc. was scheduled June 23 to release its weekly rig count report, which has risen for 22 consecutive weeks. Analysts said higher rig counts indicate future production, triggering concerns that rising US production will offset the production cuts by other producers.
On world oil markets, the Organization of Petroleum Exporting Countries and some non-OPEC producers in May extended production-cut targets through first-quarter 2018.
A monitoring committee set up by the alliance said June 22 that compliance to the production-cut targets was 106% in May—the highest since 2016.
High global oil inventories are “raising market concerns about the efficacy of OPEC market management,” Jason Gammel, Jefferies analyst, told the Wall Street Journal. “We remain of the view that inventories will [decline in the second half of the year], but empirical evidence of this is likely necessary for oil prices to inflect into an upward trend.”
Separately, Mohammed bin Salman was elevated to crown prince of Saudi Arabia this week. Saudi Arabia wants oil prices to rise to about $60/bbl to support its economy, largely through a partial public offering of Saudi Aramco.
The August light, sweet crude contract on NYMEX gained 21¢ on June 22 to settle at $42.74/bbl. The September contract was up 22¢ to close at $42.97/bbl.
The NYMEX natural gas price for July edged up a fraction of a penny to remain at a rounded $2.89/MMbtu. The Henry Hub cash gas price was $2.85/MMbtu, down 3¢.
Heating oil futures for July also edged up less than 1¢ to a rounded $1.37/gal. Reformulated gasoline stock for oxygenate blending for July gained 2¢ to $1.43/gal.
The Brent crude contract for August on London’s ICE increased 40¢ to $45.22/bbl while the September contract was up 36¢ to $45.41/bbl. Brent has dropped about $9/bbl in 4 weeks, Commerzbank analysts said. The July gas oil contract dropped $1 to $412.25/tonne.
OPEC’s basket of crudes on June 22 was $42.58/bbl, down 56¢.
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