Light, sweet crude price for August jumped by more than $2/bbl June 29, marking the front-month’s largest single-session gain since early April while the September delivery price broke above $50/bbl as did Brent crude oil prices on the London market.
Analysts attributed the oil-price support in part to falling US oil supplies. The Energy Information Administration estimated US commercial crude oil inventories, excluding the Strategic Petroleum Reserve, dropped 4.1 million bbl for the week ended June 24 compared with the previous week.
The Petroleum Status Report said at 526.6 million bbl, inventories remain at historically high levels for this time of year (OGJ Online, June 29, 2016).
“Attention is now being focused more on the fundamental data again, which point to a tighter oil supply,” Commerzbank analysts said in a research note.
Oil prices also climbed on a broad-based market recovery prompted by the UK’s vote to leave the European Union. Investors are selling riskier assets. The US dollar’s value fell sharply June 29. The Wall Street Journal Dollar Index, which tracks the dollar against a basket of other currencies, fell 0.5%.
Two oil and gas platforms were shut in the Gulf of Mexico along with a natural gas pipeline following a fire at the Enterprise Products Partners LP gas processing plant in Pascagoula, Miss., on June 27. At the time, the Pascagoula plant averaged 400 MMcfd it received from third-party pipelines (OGJ Online, June 28, 2016).
Consequently, the Destin pipeline stopped its service. LLOG Exploration Co. LLC halted production at its Delta House platform while Murphy Oil Corp. has shut its Thunder Hawk platform.
LLOG said Delta House has capacity to handle 100,000 b/d of oil and 240 MMcfd of gas. Murphy Oil said Thunder Hawk has the capacity to handle 60,000 b/d of oil and 70 MMcfd of gas.
Murphy said it plans to send its gas to an alternate processing plant to ensure minimal disruptions to its operation.
The natural gas contract for August dropped 2.7¢ to close at a rounded $2.86/MMbtu. The Henry Hub gas price was $2.93/MMbtu, rising 7¢.
Heating oil for July delivery gained 6¢ to a rounded $1.53/gal. The price for reformulated gasoline stock for oxygenates blending for July was up nearly 1.5¢ to a rounded $1.52/gal.
The August Brent crude contract on London’s ICE gained $2.03 on June 29 to $50.61/bbl. The contract for September rose $2.06 to $51.32/bbl. The July gas oil contract rose $21.50, settling at $450/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes on June 29 was $45.82/bbl, up $1.36.
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