Crude oil futures hit a speed bump last week amid rumors that some crude oil producing countries were going to increase their production soon.
Prices on the international exchange for Brent crude futures declined from its high of $80 per barrel to $75.
In the U.S., futures prices for 30-day delivery on NYMEX declined to $64.75 from $70 a week ago.
Of course, all of this impacted refined products, most notably gasoline.
News broke recently that officials from Saudi Arabia and Russia, the two largest exporters of crude oil, met and informally agreed to push for increasing production and exports. Saudi officials then met with other Arab members of the Organization of Petroleum Exporting Countries (OPEC) – Algeria, Kuwait and United Arab Emirates – to discuss the change in policy, which will be discussed at OPEC’s meeting in Vienna on June 22.
US crude production climbed in March to 10.47 million barrels per day, a monthly record, according to the Energy Information Administration (EIA). Production is up 1.3 million barrels per day over last year.
Demand also grew by 526,000 barrels per day driven primarily by increases in gasoline and jet fuel.
EIA reported an inventory increase of 2 million barrels last week to 436 million barrels. However, inventories for the year are down 76 million barrels.
Prices on NYMEX are higher than actual prices paid for oil purchases at the lease. The posted price for North Texas was around $61 per barrel. The price in the Permian Basin of West Texas is around $54 because of an oversupply from increased shale production. Prices in South Texas ranged from $55-$59.
Other factors affecting oil prices internationally are political turmoil in Venezuela, new economic sanctions on Iran, tariff negotiations on steel and aluminum, and re-negotiation of the North American Free Trade Agreement.
Alex Mills is the former President of the Texas Alliance of Energy Producers. The opinions expressed are solely of the author.