MARKET WATCH: Oil futures maintain downward momentum

Light, sweet crude oil futures prices fell July 27 to settle at less than $48/bbl on the New York market while Brent prices on the London market plunged more than $1 to below $54/bbl. Both marked their lowest settlements since March.

Analysts attributed dropping crude oil prices in part to a decline in the Chinese stock market and in part to a climb in the US rig count.

Scotiabank analyst Patricia Mohr noted a sharp correction in China’s equity markets contributed to triggering a widespread retreat across world commodity prices, including gold.

Regarding oil prices in particular, Mohr noted the prospect of an eventual return of Iran’s oil to world markets although she also said that appears unlikely to happen before 2016.

Meanwhile, US Federal Reserve Chair Janet Yellen has said the Fed likely could begin lifting interest rates again this year, possibly in September.

“The resulting strength in the US dollar, combined with lower-than-expected bullion purchases by China’s central bank since 2009, triggered ‘bear-raid’ selling by Chinese hedge funds and a sharp drop in…gold prices,” to more than a 5-year low recently, Mohr said.

Morgan Stanley analyst Adam Longson said crude demand had supported prices earlier in the year, but demand now appears to be nearing a seasonal peak. He expects crude demand will decline in coming weeks.

Energy prices

The September crude oil contract on the New York Mercantile Exchange fell 75¢ on July 27 to settle at $47.39/bbl. The October contract was down 76¢ to $47.85/bbl.

The natural gas contract for August was up 1¢ to a rounded $2.79/MMbtu. The Henry Hub, La., gas price was up 2¢ to $2.83/MMbtu.

Heating oil for August delivery was down by nearly 3.5¢ to a rounded $1.60/gal. The price for reformulated gasoline stock for oxygenates blending for August fell by nearly 1¢ to reach a rounded $1.82/gal.

The September ICE contract for Brent crude fell by $1.15 to $53.47/bbl on July 27. The October contract was down $1.09 to $53.93/bbl. The ICE gas oil contract for August was down $10.25 to $490.25/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes for July 27 was $51.29/bbl, down 79¢.

Contact Paula Dittrick at paulad@ogjonline.com.

*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.

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