Oil prices dropped to settle above $45/bbl on the New York market July 18 while the near-month natural gas futures price also fell on what analysts called lingering concerns about a gas storage surplus.
Gas for August delivery settled at $2.72/MMbtu on the New York Mercantile Exchange. The contract has has settled in a range of $2.70-$2.80/MMbtu for 10 consecutive sessions after jumping nearly 50% throughout June when it gain more than $1/MMbtu for the month.
The Energy Information Administration reported that gas in underground storage across the Lower 48 reached an estimated 3.24 tcf as of July 8, a net increase of 64 bcf from the previous week (OGJ Online, July 15, 2016).
Stocks were 507 bcf higher than last year at this time and 586 bcf above the 5-year average of a rounded 2.66 tcf, the Gas Storage Report said.
Some analysts suggest the gas price could rally to $3/MMbtu from summer demand for gas-fired power to run air conditioners. Weather forecasts call for hotter-than-average temperatures in coming weeks.
But power plants tend to switch to coal when gas nears $3/MMbtu so other analysts say that hot temperatures might not result in growing gas demand.
“There’s been so much expectation for a very hot week,” Kent Bayazitoglu, Gelber & Associates analyst in Houston, told the Wall Street Journal. “Any time there’s a crack in the forecast prices start to fall,” he said.
Regarding world oil markets, analysts said oil traders apparently shrugged off an attempted military coup in Turkey during July 16-17 that initially raised concerns about possible disruption to the flow of oil through Turkish shipping routes.
But the Bosporus Straits operated as usual on July 18. The waterway was closed for several hours during the July 15 failed coup attempt but reopened on July 16.
The NYMEX crude oil contract for August fell 71¢ to settle at $45.24/bbl on July 18. The September contract also dropped 71¢ to close at $45.94/bbl.
The gas futures contract for August fell a rounded 3¢ to $2.72/MMbtu. Cash gas prices went the other direction. The Henry Hub gas price was $2.81/MMbtu, up 14¢ on July 18.
Heating oil for August delivery declined nearly 2¢ to a rounded $1.38/gal. The price for reformulated gasoline stock for oxygenates blending for August dropped 3¢ to a rounded $1.39/gal.
The September Brent crude contract on London’s ICE fell 65¢ on July 18 to $46.96/bbl. The contract for October decreased 67¢ to $47.45/bbl. The August gas oil contract settled at $401.75/tonne, down $11.25.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was $43.36 on July 18, up 12¢.
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