MARKET WATCH: NYMEX crude oil for August drops under $45/bbl

The light, sweet crude oil price for August delivery fell moderately on the New York market July 11 to settle under $45/bbl. The Brent crude oil price for September delivery fell about 50¢ on the London market to settle at $46.25/bbl.

Ole Hansen, Saxo Bank’s head of commodity strategy, noted that July and especially August have proved difficult months for oil-price support for 2 years.

“Crude oil is currently testing the lower end of our expected $45 to low 50’s range,” Hansen said. “Following the failure to break decisively above $50, we have seen speculative traders such as hedge funds begin to offload what back in late April was a record long position.”

Separately, China’s apparent oil demand contracted 2.7% in May from a year earlier to 10.88 million b/d, said an S&P Global Platts analysis of Chinese government data. Platts China Oil Analytics forecast China’s 2016 apparent oil demand will grow by less than 2%.

During the first 5 months of 2016, China’s apparent oil demand averaged 11.1 million b/d, down 0.8%. In contrast, apparent oil demand increased 9.1% during January-May 2015 when lower fuel prices encouraged consumption, Platts China Oil Analytics said.

China’s oil demand growth is expected to moderate during 2016 because gross domestic product growth is slowing with economic rebalancing. China’s government data shows the economy expanded by 6.7% in the first quarter, down slightly from fourth-quarter 2015.

Refinery throughput in May averaged 10.46 million b/d, the China’s National Bureau of Statistics reported, marking a 0.04% decline year-over-year and a 4.3% drop month-over-month.

However, net imports of key oil products slumped 41.4% from a year earlier to an average 423,000 b/d in May, said statistics from China’s General Administration of Customs.

Platts China Oil Analytics said May’s oil-demand contraction represented the fourth consecutive month of Chinese negative growth, which Platts attributed to declines in gasoil and fuel oil demand along with slowing economic growth.

Energy prices

The crude oil contract for August on the New York Mercantile Exchange fell 65¢ on July 11 to settle at $44.76/bbl. The September contract dropped 60¢ to $45.52/bbl.

The natural gas contract for August was down nearly 10¢ to a rounded $2.70/MMbtu. But US cash prices gained. The Henry Hub gas price was $2.85/MMbtu, up 8¢ on July 11.

Heating oil for August delivery rose a fraction of a penny to remain at a rounded $1.41/gal. The price for reformulated gasoline stock for oxygenates blending for August edged up 1¢ to a rounded $1.38/gal.

The October Brent crude contract on London’s ICE decreased 48¢ to $46.90/bbl. The August gas oil contract for July 11 was $415.25/tonne. The July gas oil contract has expired.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was $42.21/bbl on July 11, down 38¢.

Contact Paula Dittrick at paulad@ogjonline.com.

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