Oil prices dive after NYMEX contracts expire, Nigeria exceeds OPEC production quota

High U.S. product stocks and the assurance of uninterrupted Iraqi crude exports also contributed to the lowering of oil prices

Tracy Wilson

PNA Staff Writer

Reports that Nigerian oil production exceeded its OPEC quota and expiration of the June NYMEX products contracts sent crude oil and products prices down on the last trading day of May, according to a monthly report released June 3 by the U.S. Department of Energy’s Energy Information Administration.

The reports of significant Nigerian overproduction signaled even more erosion of the positive market sentiment triggered by OPEC’s March agreement to cut global output by setting oil production quotas.

Other factors contributing to the softening of prices late in May included continued high U.S. product stocks and a seemingly smooth transition to the sixth phase of U.N.-sanctioned Iraqi “oil-for-food” sales, which reduced concerns about a possible gap in export deliveries.

The easing of crude oil and petroleum products prices on U.S. spot and futures markets left the NYMEX front-month crude oil contract at its lowest level since mid-April.

Gasoline prices covered nearly a 2-cent range during the last week of May, influenced both by crude oil prices and product-specific factors. Refinery production issues continued to be a major reason, including various unit problems on the West Coast and a one-day shutdown of Exxon’s Baytown refinery complex due to a May 26 power failure.

The shutdown prompted a rise in gasoline prices that day.

Prices tailed off May 28 as the June NYMEX contract expired, despite Memorial Day weekend representing the start of the traditional driving season.

For information regarding this report, contact the National Energy Information Center at 202 586-8800 or visit [email protected] on the Internet.