MARKET WATCH: NYMEX oil prices drop on global geopolitical, economic worries

Light, sweet crude prices for February delivery fell modestly on the New York market Jan. 4 while analysts and traders watched escalating tensions in the Middle East, violence in Libya, and volatility on the Chinese stock market.

Saudi Arabia executed a Shiite cleric, which angered Iran. Consequently protesters stormed the Saudi Embassy in Tehran, and Saudi Arabia severed diplomatic ties with Iran (OGJ Online, Jan. 4, 2016).

Traders and analysts also monitored escalating tensions in Libya. Islamic State fighters reportedly attacked two oil terminals in eastern Libya, setting fire to a large storage tank associated with the Ras Lanuf oil complex, oil officials said Jan. 4.

Weeks ago, Libya’s two rival governments signed a power-sharing agreement calling for the formation of a national-unity government by mid-January.

Libya’s National Oil Co. confirmed the attacks and also reported car bombs exploded at the gates of the Es Sider oil port Jan. 4.

The Wall Street Journal reported two unidentified Libyan officials blamed the attacks on Islamic State.

Es Sider and Ras Lanuf, which together can ship 560,000 b/d, have been shut for more than a year but continue to provide oil storage.

Oil traders and analysts also watched volatility in China’s stock markets, saying investors were uncertain how the Chinese Securities Regulatory Commission will handle a ban on selling by large stakeholders, expected to expire Jan. 8.

On Jan. 4, declines in certain stocks were so sharp that Chinese trading was halted early. On Jan. 5, the Asian giant’s stock regulator blamed a new circuit-breaker system, saying the system, designed to protect small investors, will be revised.

Energy prices

The February crude oil contract on the New York Mercantile Exchange dropped 28¢ to settle Jan. 4 at $36.76/bbl. The March contract was down 22¢ to settle at $37.95/bbl.

The NYMEX natural gas contract for February declined less than a penny to a rounded $2.33/MMbtu. The Henry Hub gas price climbed to $2.39/MMbtu on Jan. 4, up 7¢.

Heating oil for February delivery increased less than a penny to a rounded $1.13/gal. The price for reformulated gasoline stock for oxygenates blending for February was up nearly 2¢ to a rounded $1.29/gal.

The February ICE contract for Brent crude dropped 6¢ to $37.22/bbl, and the March contract was down by 7¢ to $37.60/bbl. The ICE gas oil contract for January was $328/tonne on Jan. 4, up $1.75.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes for Jan. 4 was $31.79/bbl, up 52¢.

Contact Paula Dittrick at

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