Oil prices sank more than $2/bbl on the New York market Sept. 18 as market participants reacted to comments from the US Federal Reserve about a soft global economy. Fed officials cited worries about how a slowing economy in China could affect the US economy.
“China is weighing on the demand side. Everything that is negative out of China is even more bearish than I am,” said James Williams of WTRG Economics. “We are still in an oversupplied market by at least 1.5 million b/d.”
The Fed decision to hold interest rates steady came toward the end of a volatile week. Oil prices had surged more than $2/bbl on Sept. 16 after the US Energy Information Administration estimated a 2.1 million bbl drop in inventories.
The new total of 842 was the lowest since the first week of January 2003. The rig count has fallen by 43 units since the week ended Aug. 21.
The downward shift follows a short-lived summer rebound in which the total lifted to 885 from a previous low for the current downturn of 857. The latest count was down 1,089 rigs year-over-year.
The October crude oil contract on the New York Mercantile Exchange declined $2.22 to $44.68/bbl on Sept. 18 while the November crude oil contract was down $2.18 to $45.02/bbl.
The natural gas contract for October fell nearly 5¢ to a rounded $2.60/MMbtu. The Henry Hub, La., gas price also was down 5¢ to $2.63/MMbtu.
Heating oil for October delivery declined a rounded 4¢ to a rounded $1.49/gal. The price for reformulated gasoline stock for oxygenates blending for October was down about 2¢ to a rounded $1.37/gal.
The November ICE contract for Brent crude dropped $1.61 to $47.47/bbl, and the December contract fell by $1.63 to $48.23/bbl. The ICE gas oil contract was unavailable.
The average price for the Organization of Petroleum Exporting Countries' basket of 12 benchmark crudes fell 76¢ to $44.34/bbl on Sept. 18.
Contact Paula Dittrick at firstname.lastname@example.org.
*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.