MARKET WATCH: NYMEX oil prices drop on higher US rig count

Light, sweet crude oil prices fell on the New York market July 22 to their lowest level since May 9. Analysts attributed falling oil prices to ample world gasoline supplies and also a climbing weekly US rig count, which suggests world oil inventories could remain high longer than expected.

Brent crude oil prices settled July 22 on the London market at their lowest settlement since May 10.

China’s gasoline exports reached a near-record high of 1.1 million tonnes in June, said statistics released July 21 from China’s General Administration of Customers.

“Exports from China will…add to the global glut of products,” Thomas Pugh, a Capital Economics analyst, told the Wall Street Journal.

China’s gasoline statistics came after the Energy Information Administration estimated US gasoline stocks rose by 900,000 bbl to 241 million bbl for the week ended July 15, which was 11% above year-ago levels (OGJ Online, July 20, 2016).

The US rig count has risen in 7 out of 8 weeks. Baker Hughes Inc. said the US drilling rig count gained 15 units to 462 for the week ended July 22. Fourteen of the additional rigs drilled for oil (OGJ Online, July 22, 2016).

Miswin Mahesh, analyst with Barclay’s, foresees India’s oil demand accelerating during the fourth quarter. Both India’s and China’s oil demand lagged in the third quarter.

“An uptick in demand over the fourth quarter is likely to tighten market balances again,” Mahesh said in a “Commodities Weekly” note. “We see Brent prices recovering from $45/bbl in the third quarter to $50/bbl in the fourth quarter.”

Energy prices

The NYMEX crude oil contract for September declined 56¢ to settle at $44.19/bbl on July 22. The October contract dropped 57¢ to close at $44.88/bbl.

The natural gas contract for August gained 8.5¢ to a rounded $2.78/MMbtu. The Henry Hub gas price rose 8¢ to $2.78/MMbtu on July 22.

Heating oil for August delivery dropped 1¢ to a rounded $1.36/gal. The price for reformulated gasoline stock for oxygenates blending for August edged up less than a penny to a rounded $1.36/gal.

The September Brent crude contract on London’s ICE fell 51¢ on July 22 to $45.69/bbl. The contract for October declined 53¢ to $46.06/bbl. The August gas oil contract settled at $395.25/tonne, down $12.75.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was $41.71/bbl on July 22, down $1.22.

Contact Paula Dittrick at

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