Supply constricts ANS
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Dueling bullish, bearish market factors buffet prices in narrow range
Steve Sutherlin Petroleum News
Alaska North Slope crude reestablished itself in the upper quadrant of the $60s May 28, rising 75 cents to close at $67.88 per barrel. West Texas Intermediate rose 95 cents on the day to close at $61.84 and Brent rose 81 cents to close at $64.90.
From Wednesday to Wednesday, ANS gained just 21 cents from its May 21 close of $67.67 to its close of $67.88 May 28.
A number of factors over the week of trading augured for higher crude prices, but gains were held in check by offsetting bearish possibilities looming over the market. ANS traded in a tight pattern, never closing under $67 or over $68 during the week.
WTI and Brent continued upward in Asian trade May 29, each up more than a dollar as Petroleum News went to press.
A fresh boost of demand optimism sparked from a news that a U.S. federal trade court had ruled that President Trump could not proceed with his reciprocal tariff scheme. The court said Trump had superseded his authority in imposing the tariffs.
The government immediately appealed the ruling to the U.S. Court of Appeals for the Federal Circuit, CNBC reported
The Organization of the Petroleum Exporting Countries and its allied exporting nations provided additional lift by holding firm on the group's overall production cuts, as announced at the 39th OPEC and non-OPEC Ministerial Meeting May 28. Another such meeting will be held Nov. 30 to reassess production levels.
A separate subgroup of OPEC+ nations could still add to supplies in July, by continuing a rollback of a separate voluntary agreement for production curbs. That decision will be made in a May 30 meeting.
"Expectations that OPEC+ will press ahead with plans to raise output, potentially by 411,000 barrels per day in July, could continue to weigh on the market," George Pavel, general manager at Naga.com Middle East told the Wall Street Journal in an email.
Traders also are on alert to see if the United States will further restrict Russian crude exports by adding sanctions for new aggression against Ukraine.
An additional 220,000 bpd is slated to be slashed from world supplies, based on a May 27 Reuters report that the Trump administration will not extend Chevron's license to export oil from its operations in Venezuela. The administration will allow Chevron to maintain its infrastructure in the country.
World crude supply conversely would see a boost if U.S./Iran negotiations bear fruit, bringing a new nuclear deal and an easing of sanctions on Iran.
But a May 27 New York Times report said that Israel was considering strikes on Iranian targets, which could muddy the progress of negotiations. Israel has denied the reports.
On May 27 ANS fell 66 cents to close at $67.13, WTI fell 64 cents to close at $60.89 and Brent fell 69 cents to close at $64.09.
U.S. markets were closed May 26 for the Memorial Day holiday.
ANS added 57 cents May 23 to close at $67.79, as WTI rose 33 cents to close at $61.53 and Brent added 34 cents to close at $64.78.
Prices slid May 22, with ANS sinking 44 cents to close at $67.23, as WTI fell 37 cents to close at 61.20, and Brent dropped 47 cents to close at $64.44.
ANS traded at a $2.98 premium to Brent May 28, and at a $6.04 premium over WTI.
A resurgence of demand? American Petroleum Institute data released May 28 showed on that U.S. commercial oil inventories were drawn down by 4.24 million barrels for the week ending May 23, raising hopes that U.S. demand was gaining strength.
The weekly U.S. Energy Information Administration data report was delayed until May 29 due to the holiday week.
"From May through August, the data points to a constructive, bullish bias with liquids demand set to outpace supply," Mukesh Sahdev, Global Head of Commodity Markets at Rystad Energy, said in a note reported by CNBC.
Sahdev said he expects demand growth outpacing supply growth by 0.6 million to 0.7 million bpd.
There is "space for additional OPEC+ output for July," he said, adding that beyond August into September, "this window could close, and any further increase would likely depend on supply disruptions elsewhere in the market."
Goldman Sachs reiterated its bearish stance on oil prices for 2025 and 2026, Forbes reported May 28.
Goldman expects higher non-OPEC crude production, even when excluding U.S. shale output.
In a note, the bank said it now expects Brent and WTI to average $56 and $52 per barrel respectively in 2026, while it maintained its 2025 forecasts for Brent and WTI at $60 and $56 per barrel respectively.
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