Crude Oil Prices Increase on Futures Market
This opinion piece presents the opinions of the author.
It does not necessarily reflect the views of Rigzone.
As supplies of crude oil at Cushing, Oklahoma, dropped last week, prices on the New York Mercantile future exchange (July) settled at $104.40 per barrel.
Gasoline for July delivery rose $0.0263 to settle at $3.0008 per gallon, and July heating oil gained $0.0202 to $2.9043 per gallon.
The Brent-WTI spread rose from the lowest level since April after the EIA said supplies at Cushing dropped 198,000 barrels to 21.2 million last week.
Falling inventories at the hub have increased prices and narrowed the gap.
Brent gained on concern that Middle East tension will spread and disrupt supplies. Brent crude traded at a premium of $5.55 to WT, up from $5.17, the smallest since April 14th.
Cushing supplies reached the lowest level in more than 5 years last week, according to the EIA.
Analysts at Morgan Stanley have estimated a minimum operating level of 20 million barrels at the hub.
Cushing inventories are down 49% since the southern leg of the Keystone XL pipeline began moving oil to Gulf refineries from the hub in January. The decline last week was the smallest since a gain in early April.
The WTI-Brent spread has averaged about $6.60 in the 2nd quarter, down from $9.41 in the January-March period.
The EIA said in a monthly report that seasonal demand for refined products and strong refinery runs will help keep the WTI discount to Brent near $7 for a few months and the gap will widen to $12 in December. The EIA expects the discount to average $9 in 2014 and $11 in 2015.
Total US crude supplies decreased 2.6 million barrels to 386.9 million last week, a two-month low, the EIA reported. Refineries operated at 87.9% of their capacity last week, down from 90.8%. Marathon Petroleum shut a crude unit at the Garyville, Louisiana, refinery after tornado-related damage on May 30th. The unit was brought back online yesterday after the company installed a temporary cooling water system.
Brent climbed as fighters from a breakaway al-Qaeda group are in position to seize Iraqi energy infrastructure in the northern part of the country after taking control of Mosul, Iraq’s second-largest city. The fighting in the northern Iraqi city forced a halt in repairs to a main pipeline from Kirkuk to the Mediterranean port of Ceyhan, Turkey. The fighting hasn’t extended to the southern part of the country, from where about 75% of Iraq’s crude production comes. The hostilities are having no effect on Iraq’s crude shipments, Oil Minister Abdul Kareem al-Luaibi said.
Iraq produced 3.3 million bpd in May, the second highest among OPEC. A big question for the oil sector in Iraq is whether extremist groups will seek to expand their attacks from the Kirkuk-Ceyhan pipeline to other energy infrastructure, Barclays said in a report.
In London, the Brent contract for July delivery on ICE settled $0.43 higher at $109.95 per barrel yesterday.
Alex Mills is President of the Texas Alliance of Energy Producers.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- USA Regional Banks Dramatically Step Up Loans to Oil and Gas
- Oil Markets Were Already Positioned for Iran Attack
- An Already Bad Situation in the Red Sea Just Got Worse
- Valeura Makes Three Oil Discoveries Offshore Thailand
- EU Offers $900MM in Funding for Energy Infrastructure Projects
- Chile's ENAP Says Working on Decarbonization Plan
- Germany to Provide $2.3B Aid for Decarbonization of Industrial Sectors
- Mexico Presidential Frontrunner Plans to Spend Billions on RE, Gas Power
- Macquarie Strategists Warn of Large Oil Price Correction
- JPMorgan CEO Says LNG Projects Delayed Mainly for Political Reasons
- USA, Venezuela Secretly Meet in Mexico as Oil Sanctions Deadline Nears
- EIA Ups Brent Oil Price Forecast for 2024 and 2025
- Petrobras Discovers Oil in Potiguar Basin
- EIR Says Oil Demand Will Not Peak Before 2030
- Biden Plans Sweeping Effort to Block Arctic Oil Drilling
- Pantheon Upgrades Kodiak Estimates to 1.2 Billion Barrels
- Dryad Flags Red Sea 'Electronic Warfare' Alert
- Russian Oil Is Once Again Trading Far Above the G-7 Price Cap Everywhere
- Oil and Gas Executives Predict WTI Oil Price
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Chinese Mega Company Makes Another Major Oilfield Discovery
- Oil and Gas Execs Reveal Where They See Henry Hub Price Heading
- Equinor Makes Discovery in North Sea
- ExxonMobil Racks Up Discoveries in Guyana Block Eyed by Chevron
- Macquarie Strategists Warn of Large Oil Price Correction
- DOI Announces Proposal for Second GOM Offshore Wind Auction
- Standard Chartered Reiterates $94 Brent Call
- Chevron, Hess Confident Embattled Merger Will Close Mid-2024