The light, sweet crude oil contract for September delivery settled below $45/bbl on the New York market Aug. 6 while the Brent price for the same month remained below $50/bbl on the London market. The downward momentum appeared to be continuing in early Aug. 7 trading.
The dollar strengthened against other currencies after the US Labor Department reported 215,000 additional jobs in July. Oil trades in dollars, and a stronger dollar makes oil more expensive for buyers using other currencies.
Both light, sweet crude oil and Brent crude oil prices have slid for weeks on concerns about ample world supply and potential weaker Chinese demand. Traders also awaited the latest Baker Hughes Inc. weekly rig count, scheduled to be released later Aug. 7.
Increased crude oil production was reported by many US shale producers in their second-quarter earnings statements. Devon Energy Corp. of Oklahoma City and Whiting Petroleum Corp. of Denver each said they achieved record production levels.
Even as some companies report writedowns because asset values have fallen given lower oil and gas prices, production levels have surpassed many producers’ own forecasts given improved drilling efficiencies.
Whiting said it produced 170,000 boe/d in the Bakken during the second quarter, a record for the company.
“We are tooling Whiting to run and grow at $40-50/bbl oil,” said James Volker, Whiting chief executive officer.
The September crude oil contract on the New York Mercantile Exchange dropped 49¢ on Aug. 6 to settle at $44.66/bbl. The October contract was down 46¢ to $45.09/bbl.
The natural gas contract for September was up 1.5¢ to a rounded $2.81/MMbtu. The Henry Hub, La., gas price dropped 10¢ to $2.76/MMbtu.
Heating oil for September delivery rose 1¢ to a rounded $1.55/gal. The price for reformulated gasoline stock for oxygenates blending for September dropped 2¢ to a rounded $1.65/gal.
The September ICE contract for Brent crude declined 7¢ to $49.52/bbl on Aug. 6. The October contract was down 6¢ to $50.09/bbl. The ICE gas oil contract for August was down $8.25 to $467.75/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes for Aug. 6 was unavailable.
Contact Paula Dittrick at email@example.com
*Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.