The front-month light, sweet crude oil contract dropped more than $1/bbl on the New York market Aug. 13 to settle below $43/bbl, putting it back around 6-year lows for the second time since Aug. 11. In early Aug. 14 trading, the New York oil price briefly touched $41.35/bbl, last seen on Mar. 4, 2009.
“Weak market fundamentals are driving prices lower, including expectations of increased supply from OPEC, and challenging demand growth in China and other emerging markets,” Edward Morse, head of Citigroup Inc. commodities research, wrote in a research note.
Citigroup revised its 2015 Brent forecast to average $54/bbl, down from its previous forecast of $58/bbl. For 2016, Citigroup now expects Brent will average $53/bbl, down from a previous forecast of $63/bbl. For light, sweet crude oil prices, Citigroup expects prices will stay below $50/bbl until the second half of 2016.
Meanwhile, US natural gas prices for September delivery fell sharply on Aug. 13, which analysts attributed to oversupply concerns and mild weather forecasts.
The Energy Information Administration estimated natural gas in underground storage across the Lower 48 states at a rounded 2.98 tcf as of Aug. 7, a net increase of 65 bcf from the previous week. Stocks were 521 bcf higher than last year at this time and 81 bcf above the 5-year average of a rounded 2.9 tcf, the weekly Gas Storage Report showed.
The September crude oil contract on the New York Mercantile Exchange plunged $1.07 on Aug. 13 to settle at $42.23/bbl. The October contract was down $1.03 to $42.98/bbl.
The natural gas contract for September was down 14¢ to a rounded $2.79/MMbtu. The Henry Hub, La., gas price climbed 1¢ to $2.92/MMbtu.
Heating oil for September delivery fell 1.8¢ to a rounded $1.57/gal. The price for reformulated gasoline stock for oxygenates blending for September dropped by nearly 5¢ to a rounded $1.71/gal.
The September ICE contract for Brent crude declined 44¢ to $49.22/bbl on Aug. 13. The October contract was down 55¢ to $49.63/bbl. The ICE gas oil contract for September dropped $2 to $475.75/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes for Aug. 12 was $47.28, up 19¢.
Contact Paula Dittrick at email@example.com.
*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.