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Light, sweet crude oil climbed modestly on the New York Mercantile Exchange May 23 with the July contract settling at nearly $51.50/bbl. Analysts attributed the gain to growing confidence that major producers will extend production targets into next year to support oil prices and reduce inventories.
The Organization of Petroleum Exporting Countries is scheduled to meet May 25 in Vienna. Saudi Arabia has pushed the idea of extending the existing production targets for 9 months to March 2018.
Members of the cartel want oil inventories worldwide to fall to a 5-year average, analysts say. But traders remain concerned that rising US oil production could counteract OPEC’s efforts.
Last year, OPEC members and 11 non-members agreed to cut output by about 1.8 million b/d of which OPEC’s share is 1.2 million b/d. The initial production-reduction targets were for 6 months starting in January.
Worldwide oil inventories have declined slower than expected, prompting some countries to call for an extension of the production targets.
Venezuela, Russia, and Algeria along with Saudi Arabia have said they support continuing the agreement through March 2018. Oman oil officials have suggested they are unopposed to 9 months but want more discussion. Kuwait officials said they would consider a 12-month extension.
The US Energy Information Administration was scheduled to release its weekly oil and product inventory report May 24. Energy prices
The July light, sweet crude contract on NYMEX climbed 34¢ on May 23 to close at $51.47/bbl. The August contract rose 32¢ to settle at $51.72/bbl.
The natural gas price for June fell 11¢ to a rounded $3.22/MMbtu. The Henry Hub cash gas price was $3.20/MMbtu, down 1¢.
Heating oil for June edged up less than 1¢ to a rounded $1.61/gal. Reformulated gasoline stock for oxygenate blending for June dropped a fraction of a cent to remain at a rounded $1.66/gal.
The Brent crude contract for July on London’s ICE gained 28¢ to $54.15/bbl. The August contract was up 30¢ to $54.41/bbl. The June gas oil contract held unchanged at $479/tonne.
OPEC’s basket of crudes on May 23 settled at $51.34/bbl, down 20¢.