The light, sweet crude oil contract for September settled at $41.87/bbl on the New York market Aug. 17, which was the lowest closing since Mar. 3, 2009, and the front-month contract set yet another fresh 6-year low. Crude oil prices repeatedly have touched the 6-year-low mark in recent days.
Barclays analyst Lynnden Branigan of London said he expects to see additional “squeeze to the downside,” and he said it’s possible New York crude oil futures could drop below $40/bbl.
“Given stretched momentum readings, however, we note increasing risk for a period of consolidation-correction later,” yet this quarter, Branigan said. He specializes in commodity technical strategy.
On Aug. 18, oil prices appeared to be continuing their downward trend in early trading on reports of dropping prices across China’s stock exchange.
China’s central bank injected the largest amount of cash into the financial system on a single-day basis in almost 19 months, signaling the Chinese government’s economic concerns after the central bank recently devalued the yuan.
“Oil prices are trading slightly lower…mainly on recent indications of weakening Asian economies, a dollar on the rise and crude supply glut,” Michael Poulsen, oil analyst at Global Risk Management, told The Wall Street Journal.
The September crude oil contract on the New York Mercantile Exchange declined 63¢ on Aug. 17 to settle at $41.87/bbl. The October contract was down 70¢ to $42.41/bbl.
The natural gas contract for September was down 7¢ to a rounded $2.73/MMbtu. The Henry Hub, La., gas price declined 7¢ to $2.76/MMbtu.
Heating oil for September delivery fell less than a penny to a rounded $1.55/gal. The price for reformulated gasoline stock for oxygenates blending for September dropped 3¢ to a rounded $1.65/gal.
Previously, the American Automobile Association reported the national average retail gasoline price had risen for 6 consecutive days as of Aug. 17. Analysts largely attributed the rally to an outage at BP PLC’s refinery in Whiting, Ind.
“Demand has been surprisingly stout,” for gasoline, said Jim Ritterbusch, president of energy consultant Ritterbusch & Associates. “Gasoline still looks like the star commodity to me—the one that’s going to be best supported when you look out over the next month.”
The October ICE contract for Brent crude declined 45¢ to $48.74/bbl on Aug. 17. The November contract was down 47¢ to $49.58/bbl. The ICE gas oil contract for September rose $1 to $474.50/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes for Aug. 17 was $45.96/bbl, down 66¢.
Contact Paula Dittrick at firstname.lastname@example.org.
*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.