Oil prices slipped lower June 17 with front-month crude essentially flat in the New York market after a strong surge June 14 on reports the US will begin arming rebels in Syria. Natural gas was up 1% with favorable weather forecasts.
Trading was light in the equities market. The Standard & Poor’s 500 Index increased 1% in early trading on June 17 “and remained relatively flat thereafter, the initial gain implying modest optimism in the market that this week's news will support continued monetary easing,” said analysts in the Houston office of Raymond James & Associates Inc. The SIG Oil Exploration & Production Index and the Oil Service Index advanced 2% each.
“As geopolitical tensions eased, support for oil markets faded, lending both [crude] benchmarks a negative bias towards the latter half” of the session, said Marc Ground at Standard New York Securities Inc., the Standard Bank Group.
In other news, the relatively moderate cleric Hassan Rouhani won a surprise victory in Iran’s presidential election over the weekend, getting 50.7% of the vote and avoiding a runoff. He will succeed the virulently antiwestern two-term incumbent Mahmoud Ahmadinejad. Although an establishment figure, Rouhani won widespread support from reformists with plans to change Iran’s foreign relations to alleviate the economic impact of tough international sanctions (OGJ Online, June 17, 2013).
While Rouhani’s election may open the way to more conciliatory negotiations of Iran’s nuclear program and possible lifting of sanctions, Ground said, “There is still much uncertainty of what the way forward will be once Rouhani takes office in August. The situation in Syria also bears monitoring, although unless there is a significant increase in the likelihood that other oil-producing countries in the region will be drawn into the conflict, rallies on news-flow surrounding this issue will fade.”
The July contract for benchmark US sweet, light crudes slipped 8¢ to $97.77/bbl June 17 on the New York Mercantile Exchange. The August contract dipped 4¢ to $98.03/bbl.
On the US spot market, West Texas Intermediate at Cushing, Okla., was down 8¢ to $97.77/bbl.
Heating oil for July delivery decreased 1.19¢ to $2.95/gal on NYMEX. Reformulated stock for oxygenate blending for the same month declined 4.06¢ to $2.86/gal.
The July natural gas contract bounced back by 14.2¢ to $3.88/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., continued rising, up 4.4¢ to $3.79/MMbtu.
In London, the August IPE contract for North Sea Brent dropped 46¢ to $105.47/bbl. Gas oil for July fell $3.25 to $894/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes gained 52¢ to $103.85/bbl.
Contact Sam Fletcher at email@example.com.