Goldman Sachs Wrote:reiterate our forecast for prices to remain low in 2015 with an only gradual recovery into year-end.”
Oil posts best close of 2015 ahead of supply report
NEW YORK (MarketWatch)—The U.S. oil benchmark soared for a second straight session Tuesday to close at its highest level of 2015 a day ahead of weekly data that is expected to show a decline in domestic crude output.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in May CLK5, -1.80% rose $1.84, or 3.5%, to close at $53.98 a barrel—the highest settlement since Dec. 30. Over the past two sessions, May crude has gained nearly 10%
Brent crude for May delivery LCOK5, -1.15% on London’s ICE Futures rose 98 cents, or 1.7%, to $59.10 a barrel, contributing to a 7.6% two-day rise.
Bulls “are really running with it right now,” said Robert Yawger, director of energy futures at Mizuho Securities, in a phone interview.
Investors expect crude-oil data from the U.S. Energy Information Administration on Wednesday to show a second consecutive weekly decline in oil production and for supplies at the Nymex futures delivery hub in Cushing, Okla., to show a drop or only a very small increase, Yawger said.
Analysts surveyed by The Wall Street Journal forecast total U.S. oil inventories to show a rise of 3.4 million barrels, on average, in the week ended April 3. The EIA report is due at 10:30 a.m. Eastern on Wednesday.
Less influential inventories data from the American Petroleum Institute is expected later Wednesday.
Oil data last week showed U.S. oil production fell by a 36,000 barrels a day in the week ended March 27—a small decline but the first since mid-January.
Meanwhile, technical factors are also positive as Nymex oil futures trade within sight of the 2015 intraday high of $54.24 a barrel set on Feb. 3, and the 100-day moving average at $54.95, Yawger said.
There is still a “sea of crude oil” in the market right now, but for the first time in three months, the market is looking at some positive supply-side issues, Yawger said, at the same time refiners are beginning to come back on line after the traditional maintenance period.
Bears, however, aren’t convinced that the market has rebalanced sufficiently in response to a global supply glut that has seen oil prices fall by more than half from their mid-2014 peak.
Goldman Sachs analysts, in a note, said a declining U.S. oil rig count, while shrinking faster than expected, likely wasn’t sufficient to balance the market in 2016. They said prices need to “stay low for longer” to achieve a sustainable slowdown in U.S. production growth.
“We therefore reiterate our forecast for prices to remain low in 2015 with an only gradual recovery into year-end.” they said, forecasting West Texas Intermediate crude to recover to shale’s marginal cost of $65 a barrel in 2016.
Nymex reformulated gasoline blendstock for May RBK5, -1.69% —the benchmark gasoline contract—rose 1.84 cents, or 1%, to $1.8609 a gallon. May natural gas futures NGK15, -0.78% rose 3 cents, or 1.1%, to $2.68 per million British thermal units.
