MARKET WATCH: Brent, NYMEX crude oil prices rally on US inventory drop
Brent crude oil prices for July and August contracts settled above $50/bbl on the London market May 10 while light, sweet crude oil prices for June and July delivery rallied by more than $1/bbl to close above $47/bbl in New York.
The US Energy Information Administration showed crude oil supplies, excluding the Strategic Petroleum Reserve, dropped by an estimated 5.2 million bbl from the previous week to 522.5 million bbl for the week ended May 5, exceeding market expectations.
The Weekly Petroleum Status Report showed US oil production of 9.314 million b/d for the week ended May 5, up 21,000 b/d from the previous week. Lower 48 production was 8.783 million b/d, up 16,000 b/d, while Alaska production was 531,000 b/d, up 5,000 b/d.
US crude oil production is up by 864,000 b/d since October 2016, said Ole Hansen, head of commodity strategy for Saxo Bank. He noted 14 consecutive weeks of US production gains.
“While this is staggering, we are seeing signs of growth slowing,” Hansen said. He said data shows an average weekly rise of 33,000 b/d during the first quarter that slowed to 23,000 b/d so far during the second quarter.
Meanwhile, oil traders noted that ExxonMobil Corp. workers in Nigeria have gone on strike. The workers last week warned of a potential strike in protest of what they called the improper dismissal of 83 employees. Nigerian National Petroleum Corp. officials said Nigeria is producing 2 million b/d.
Elsewhere, Libya’s production reportedly has reached 800,000 b/d—the highest level since 2014.
The Organization of Petroleum Exporting Countries released its Monthly Oil Market Report showing the cartel reduced production by 18,200 b/d during April even though Saudi Arabia raised output by 49,200 b/d, secondary sources said. Overall, OPEC production averaged 31.73 million b/d during April.
The light, sweet contract for June crude oil delivery gained $1.45 to close at $47.33/bbl on the New York Mercantile Exchange May 10. The July contract was up $1.43 to settle at $47.70/bbl.
The natural gas price for June was up 6¢ to a rounded $3.29/MMbtu. The Henry Hub cash gas price gained 8¢ to $3.11/MMbtu on May 10.
Heating oil for June increased 3¢ to a rounded $1.47/gal. Reformulated gasoline stock for oxygenate blending for June gained 5¢ to a rounded $1.54/gal.
The Brent crude contract for July on London’s ICE was up $1.49 to settle at $50.27/bbl. The August contract increased $1.43 to $50.54/bbl. The July gas oil contract was $444/tonne after expiration of the May contract.
OPEC’s basket of crudes was $47.31/bbl on May 10, up 48¢.