Energy
Tuesday, May 21st, 2024 5:08 pm EDT
Key Points
- Price Decline and Market Sentiment: Crude oil futures fell over 1% due to the absence of major market catalysts, with U.S. crude and global benchmark Brent trading within a narrow range after April’s sell-off. The reduction in geopolitical risk premiums has contributed to this decline, reflecting a lack of market conviction, as noted by Helima Croft of RBC Capital Markets.
- Current Energy Prices and Forecasts: As of Tuesday, West Texas Intermediate crude for June was priced at $78.31 per barrel, down 1.87%, and Brent crude for July at $82.22 per barrel, down 1.78%. Despite these decreases, year-to-date gains for U.S. crude and Brent are 9.3% and 6.76% respectively. RBC forecasts U.S. oil will average $79.50 per barrel and Brent $84 per barrel for the rest of the year.
- OPEC+ Production Cuts and Market Stability: Production cuts by OPEC+ have helped stabilize prices following last month’s sell-off. The coalition will meet next weekend to review its production policy, with analysts suggesting that current price levels do not support increasing supply. Both Helima Croft and John Evans, an analyst at oil broker PVM, expect OPEC+ to maintain their current stance without adding more barrels to the market.
Crude oil futures experienced a decline of over 1% on Tuesday due to the lack of significant market drivers to support prices. U.S. crude oil and the global benchmark Brent have been trading within a narrow $3 range throughout May, following a sell-off from April highs. This sell-off occurred as traders reduced the geopolitical risk premium after fears of an expanded Middle East conflict subsided. Helima Croft, head of commodity strategy at RBC Capital Markets, noted that there is currently a lack of conviction in the market, largely due to the removal of geopolitical risk premiums that had previously driven prices higher.
On Tuesday, West Texas Intermediate (WTI) crude for June delivery fell to $78.31 per barrel, a decrease of $1.49 or 1.87%, while Brent crude for July delivery dropped to $82.22 per barrel, down $1.49 or 1.78%. Year-to-date, U.S. crude oil is up 9.3% and Brent is up 6.76%. Gasoline futures for June decreased by 1.8% to $2.49 per gallon, though they remain up 18.69% for the year. Natural gas for June delivery fell by 2.33% to $2.68 per thousand cubic feet, with a year-to-date increase of 6.88%.
Investors are now paying more attention to fundamental factors, but the absence of immediate catalysts is expected to keep oil prices within their current range for the foreseeable future, as Croft highlighted in a note to clients. RBC forecasts that U.S. oil will average $79.50 per barrel and Brent $84 per barrel for the remainder of the year. Despite the lack of a supply deficit and no significant anxiety ahead of the summer season, the upcoming summer driving season remains a factor to watch.
Production cuts by OPEC+ members have established a floor for oil prices following last month’s downturn. The OPEC+ coalition is set to meet next weekend to review its production policy. John Evans, an analyst at oil broker PVM, mentioned that the market will increasingly scrutinize OPEC+’s response to current oil price movements as the meeting approaches. According to Evans and Croft, it is unlikely that OPEC+ will decide to increase supply at the current price levels.
Overall, while recent production cuts have stabilized prices, the market remains cautious, with investors waiting for more substantial data or events that could influence future price movements.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/05/21/crude-oil-prices-today.html
