Light, sweet crude oil prices dropped $1/bbl on the New York market July 27 to approach 3-month lows after a weekly government report showed an unexpected gain in US oil inventories last week. Brent crude oil prices dropped more than $1/bbl on the London market.
Commercial crude oil inventories, excluding the Strategic Petroleum Reserve, increased by an estimated 1.7 million bbl for the week ended July 22 from the previous week, the US Energy Information Administration said (OGJ Online, July 27, 2016).
The Petroleum Status Report showed total motor gasoline inventories increased 500,000 bbl to 521.1 million bbl. Analysts have been warning about a gasoline supply glut, saying it could hinder the oil-price recovery.
US oil production showed a weekly gain as well. EIA estimated 8.5 million b/d for the week ended July 22, up 21,000 b/d from a week earlier although most of the gain came from Alaska. Oil production across the Lower 48 was 8.03 million b/d for the week ended July 22, a 12,000-b/d decline from the July 15 report.
Societe Generale analyst Michael Wittner said, “With crude and gasoline bearish, and product demand growth weak, there was very little in the US weekly report to change the overall bearish tone of the global oil market.”
Meanwhile, a slightly weaker dollar helped curb the pace of the oil-price decline. Oil is traded in US dollars so a weaker dollar makes oil less expensive for buyers using other currencies.
The Wall Street Journal Dollar Index, which compares the dollar to a basket of 16 currencies, was down 0.36% at 87.33, the WSJ reported July 28.
The NYMEX crude oil contract for September dropped $1 to settle at $41.92/bbl on July 27. The October contract dropped $1.07 to close at $42.61/bbl.
The natural gas contract for August dipped by 4¢ to a rounded $2.67/MMbtu. On the spot market, the Henry Hub gas price cilmbed 8¢ to $2.80/MMbtu on July 27, nearly wiping out its losses from a day earlier.
Heating oil for August delivery dropped 3¢ to a rounded $1.30/gal. The price for reformulated gasoline stock for oxygenates blending for August dipped 2¢ to a rounded $1.32/gal.
The September Brent crude contract on London’s ICE dropped $1.40 on July 27 to $43.47/bbl. The contract for October declined $1.32 to $43.91/bbl. The August gas oil contract settled at $382.25/tonne, down $4.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was $40.49/bbl, down 13¢.
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