Oil prices rebound $2/bbl on the New York market Sept. 21 on signs that the growth of US oil production might be slowing, but commodity prices resumed their zigzag pattern again in early trading on Sept. 22, giving up some of the previous day’s gains.
Paul Horsnell, Standard Chartered head of oil research, said, “We think $50/bbl oil is too low an oil price for medium or long-term equilibrium.” He said that price is not sustainable for oil producers.
“Further, $50/bbl leads to sharp increases in demand even in a period of weak economic growth,” Horsnell said.
Global economic growth has appeared sluggish recently, and the US Federal Reserve last week announced it would hold interest rates steady for now.
Chinese President Xi Jinping told the Wall Street Journal that his government is preparing a slate of economic reforms for the rest of the year. He arrived in Seattle on Sept. 22 where he was scheduled to give a speech and meet with business leaders.
Separately, Commerzbank analysts said US crude supplies remain high, and “it will take time for them to fall back to normal levels” despite lower rig counts.
Baker Hughes Inc. said the overall US drilling rig count lost 6 units for the week ended Sept. 18 in a fourth straight week of decline (OGJ Online, Sept. 18, 2015).
The new total of 842 was the lowest since the first week of January 2003. The latest count was down 1,089 rigs year-over-year.
The natural gas contract for October fell 3¢ to a rounded $2.57/MMbtu. The Henry Hub, La., gas price also was down 4¢ to $2.59/MMbtu. Analysts said a consensus of mild weather forecasts pushed gas prices lower. In addition, the US Energy Information Administration reported levels of gas in underground storage across the Lower 48 rose by 73 bcf for the week ended Sept. 11, which also weakened gas prices.
Heating oil for October delivery climbed 2.3¢ to a rounded $1.51/gal. The price for reformulated gasoline stock for oxygenates blending for October was up a rounded 5¢ to a rounded $1.40/gal.
The November ICE contract for Brent crude increased $1.45 to $48.92/bbl, and the December contract rose $1.46 to $49.69/bbl. The ICE gas oil contract was unavailable.
The average price for the OPEC basket of 12 benchmark crudes fell 53¢ to $43.81/bbl on Sept. 22.
Contact Paula Dittrick at firstname.lastname@example.org.
*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.