The US light, sweet crude oil price for the August contract settled at just under $46/bbl on the New York market July 15, rising modestly on better-than-expected Chinese economic statistics, which boosted expectations for China’s oil demand. But a rising US rig count helped cap the gains for July 15 oil prices.
China’s National Bureau of Statistics said second-quarter gross domestic product grew 6.7% from a year earlier. The gain was higher than had been anticipated by economists who participated in a Wall Street Journal survey.
Some analysts said that China’s oil demand is likely to hold up in coming months, noting the China’s oil production is declining with mature oil fields and budget cuts.
Baker Hughes Inc. reported a US drilling rig count of 447 for the week ended July 15, up 7 units from the previous week. Most of the increase came from rigs drilling for oil (OGJ Online, July 15, 2016).
Justin Jenkins, analyst with Raymond James & Associates in Houston, said RJA remains bullish on oil prices and maintains its June forecast for the US benchmark crude price to average $80/bbl during 2017 even though many analysts suggest that a global crude glut has turned into a refined product glut.
“The thinking goes that this glut will weigh on refining fundamentals, and therefore will reduce crude throughput (demand) at refineries, which will filter through to lower crude oil prices in a vicious cycle,” Jenkins said.
US inventories of gasoline and diesel are significantly above historical averages (OGJ Online, June 13, 2016).
“However, keep in mind that as demand has grown so should inventory levels,” Jenkins said, adding that experience from previous years has shown that US product inventory surpluses can clear quickly. “We believe any impact of the product inventory overhang on the crude market will be short lived.”
The natural gas contract for August was up a rounded 3¢ to a rounded $2.76/MMbtu. The Henry Hub gas price was $2.67/MMbtu, down 10¢ on July 15.
Heating oil for August delivery declined nearly 1¢ to a rounded $1.40/gal. The price for reformulated gasoline stock for oxygenates blending for August edged up by less than a penny to a rounded $1.42/gal.
The September Brent crude contract on London’s ICE rose 24¢ on July 15 to $47.61/bbl. The contract for October increased 19¢ to $48.12/bbl. The August gas oil contract settled at $413/tonne, up $1.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was $43.24 on July 15, up 36¢.
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