The Brent crude oil benchmark climbed more than $1.50 to close above $70/bbl Mar. 23, marking the front-month’s highest level since late January while the US light, sweet crude oil benchmark for May also climbed more than $1.50 to approach $65.90/bbl.
“Geopolitics and growing concerns about the US leaving the Iran deal lifted oil prices,” Norbert Ruecker, Julius Baer’s head of macro and commodity research, told the Wall Street Journal.
US President Donald Trump’s administration last week reshuffled the national security team, naming John Bolton as national security adviser. Bolton is expected to take a tougher stance against Iran.
Trump repeatedly has criticized a 2015 international agreement to curb Iran’s nuclear program. If the US pulls out of the deal and then issues US economic sanctions on Iran, analysts say that action could limit Iran’s oil exports and reduce world oil supply.
Meanwhile, declining US oil supplies helped boost prices. The US Energy Information Administration reported a drop in the nation’s crude inventories of 2.6 million bbl for the week ended Mar. 16.
The US inventory decline comes as growing world oil demand has helped offset concerns over rising US oil production, especially from unconventional plays.
“All major economies remain in an expansion mode,” Bank of America Merrill Lynch analysts said. “For now, the global recovery in oil demand has been broad-based across regions and economic sectors.”
Many analysts suggest a possible trade war aimed at US tariffs toward its trading partners could hurt oil demand. The Trump administration last week announced new tariffs on China. Consequently, oil prices fell on Mar. 22.
Energy prices
The May light, sweet crude contract on the NYMEX gained $1.58 on Mar. 23 to settle at $65.88/bbl. The June contract closed up $1.53 to $65.71/bbl.
The NYMEX natural gas price for April dropped by nearly 3¢ to $2.59/MMbtu. The Henry Hub cash gas price fell 6¢ to $2.56/MMbtu on Mar. 23.
Ultralow-sulfur diesel for April increased 2.6¢ to a rounded $2.02/gal. The NYMEX reformulated gasoline blendstock for April gained 2¢ to $2.03/gal.
Brent crude oil for May was up $1.54 to $70.45/bbl on London’s International Commodity Exchange. The June contract was up $1.43 to $69.81/bbl. The gas oil contract for April was $611/tonne, up $4.50.
The Organization of Petroleum Exporting Countries’ basket of crudes was $66.39/bbl on Mar. 23, up 20¢.
Contact Paula Dittrick at [email protected].
