MARKET WATCH: Oil prices fall on weakening China imports, global crude oversupply

Oil prices fell on the New York and London markets June 8 on reports of slowing crude oil imports by China and on lingering concerns about ample world oil supplies. China’s crude-oil imports fell 11% in May compared with the same month last year.

“China’s imports do tend to be volatile, and so we wouldn’t read too much into one month’s data, but it does douse some cold water on the idea that improving Asian demand is underlying support for prices,” Tim Evans of Citi Futures in New York wrote in a research note.

On June 5, the Organization of Petroleum Exporting Countries maintained the cartel’s production quota at 30 million b/d. Barclays Research Inc. analyst Kevin Norrish of London said, “Last week’s OPEC meeting in Vienna was all about not rocking the boat. But something about the oil market does not add up at present, suggesting there may yet be storms ahead.”

OPEC suggested world oil demand is picking up and supply is slowing, but Norrish questioned that assessment. “A more accurate verdict on the data, in our opinion, would be demand is not picking up very much, supply growth has barely slowed at all, and things are still heading in the wrong direction for OPEC,” he said in June 8 research note.

Energy prices

The July crude oil contract on the New York Mercantile Exchange fell 99¢ on June 8 to settle at $58.14/bbl. The August contract fell 95¢ to settle at $58.61/bbl.

The natural gas contract for July rose 11¢ to a rounded $2.70/MMbtu. The Henry Hub, La., gas price also climbed 11¢ to $2.67/MMbtu.

Heating oil for July was down a rounded 1.5¢ to a rounded $1.85/gal. The price for reformulated gasoline stock for oxygenates blending for July declined 2¢ to a rounded $2.01/gal.

The July ICE contract for Brent crude decreased 62¢ to $62.69/bbl while the August contract fell 77¢ to $63.23/bbl. The ICE gas oil contract for June was up $5 to $571.75/tonne.

The average price for OPEC’s basket of 12 benchmark crudes for June 8 was $59.42/bbl, up 81¢.

Contact Paula Dittrick at paulad@ogjonline.com.

*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.

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