William Watts, MarketWatch
NEW YORK
EnergiesNet.com 05 31 2024
Oil futures ended lower Friday, booking their largest monthly declines of 2024 as traders fretted over gasoline demand and awaited a weekend decision on production cuts by the Organization of the Petroleum Exporting Countries and its allies.
In a twist ahead of the Sunday decision, news reports said Saudi Arabia had called some OPEC+ oil ministers to Riyadh. An OPEC+ spokesman said Sunday’s meeting would still take place online, raising the possibility some ministers would participate alongside Saudi Energy Minister Abdulaziz bin Salman, the Financial Times reported.
Price moves
- West Texas Intermediate crude CL00, -0.96% for July delivery CL.1, -0.96% CLN24, -0.96% fell 92 cents, or 1.2%, to end at $76.99 a barrel on the New York Mercantile Exchange.
- July Brent crude BRNN24, -0.28%, the global benchmark, fell 24 cents, or 0.3%, to settle at $81.62 a barrel on ICE Futures Europe.
- June gasoline RBM24, +0.95% rose 0.9% to close at $2.426 a gallon, while June heating oil HOM24.
- -0.26% shed 0.2% to $2.364 a gallon.
- July natural gas NGN24, +0.35% gained 0.6% to $2.587 per million British thermal units.
Market drivers
WTI posted a May decline of 6%, while Brent saw a decline of 7.1% — the largest monthly declines for both grades of 2024. Gasoline futures tumbled more than 10% in May, including 2.3% this week.Crude Oil WTI (NYM $/bbl) Front MonthSource: FactSetMay 202476.577.077.578.078.579.079.580.080.5
The continued softness in gasoline prices despite the kickoff of summer driving season — the period between Memorial Day and Labor Day — has been a drag on crude prices, analysts said. Weekly data from the Energy Information Administration on Thursday showed gasoline inventories unexpectedly rose last week as refinery runs increased.
Reuters reported Thursday that OPEC+ members are considering a deal that would see some production cuts extended through the end of 2025. OPEC+ previously agreed to cuts totaling 3.66 million barrels a day, or mbd, that are set to remain in place through the end of 2024, as well as 2.2 mbd in voluntary cuts that expire at the end of June.
The news report said the deal under discussion could extend some or all of the 3.66 mbd in cuts through 2025 and some or all of the 2.2 mbd in voluntary cuts into the third or fourth quarter of this year.
“The market has largely priced in a three-month extension of the production cuts and will react negatively to anything less,” said Rebecca Babin, senior energy trader at CIBC Private Wealth US, in emailed comments.
”If the group provides specifics on the timing and quantity of compensation from overproducing countries (Iraq, Kazakhstan, Russia), prices might see a modest increase of $1-2. Extending the cuts through the end of 2024 could support prices with a potential upside of $2-3, as it would deepen deficits in the second half of the year,” she said.
marketwatch.com 05 31 2024
