US light, sweet crude oil prices declined for a fifth consecutive trading session June 15, settling just above $48/bbl on market participants’ jitters over a June 23 British referendum on whether to exit the European Union.
Monetary policy decisions worldwide also appeared to put downward pressure on oil prices.
The US Federal Reserve on June 15 held short-term interest rates steady and lowered projections of how much the Fed might raise interest rates in coming years. Only weeks ago, several Fed officials, including Chair Janet Yellen, had suggested they might raise interest rates in June or July.
On June 15, Yellen cited economic uncertainty and declined to suggest future interest rate levels.
“I can’t specify a timetable,” about a possible interest rate increase, she told reporters at a news conference following conclusion of the Fed’s 2-day policy meeting. “We are quite uncertain about where rates are heading in the longer term.”
The Fed’s announcement weakened the dollar, which normally supports oil prices. Oil trades in dollars so a weaker dollar makes oil less expensive for buyers using other currencies. But, the Fed’s caution was interpreted by some as an indicator that the US central bank is concerned about economic growth.
Separately, the yen has soared to its strongest level against the dollar since August 2014 after Japan’s central bank left its monetary policy unchanged and lowered its inflation forecast.
The Swiss National Bank left its negative interest rate unchanged pending the British referendum while the Bank of England was expected to maintain interest rates at the 0.5% level where it has been for more than 7 years.
Goldman Sachs Group Inc. analysts issued a June 15 research note in which they called a recent oil price recovery “fragile,” saying temporary disruptions in Canada and Nigeria might not be enough to ultimately drain massive oil stockpiles.
“Outside of these disruptions, the rationalization of the oil market’s surplus remains nascent at best,” Goldman analysts said. They suggested more supply disruptions would be needed to move US light, sweet crude oil futures prices sustainably above $49/bbl in 3 months.
Natural gas for July dropped a fraction of a penny to remain at a rounded $2.60/MMbtu on NYMEX. The Henry Hub cash price was up 10¢ to $2.62/MMbtu.
Heating oil for July delivery declined 2¢ to a rounded $1.48/gal. The price for reformulated gasoline stock for oxygenates blending for July dropped nearly 2¢ to a rounded $1.50/gal.
The August Brent crude contract on London’s ICE fell 86¢ to $48.97/bbl. The September contract was down 80¢ to $49.53/bbl. The July gas oil contract settled at $441/tonne on June 15, down $2.50.
OPEC’s basket of crudes price for June 15 was $45.36/bbl, down 28¢.
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