MARKET WATCH: NYMEX September oil prices decline, nearing $43/bbl

Light, sweet crude oil prices fell by more than $1/bbl on the New York market July 25 to the front-month’s lowest settlement since Apr. 25 while Brent oil prices fell nearly $1/bbl on the London market to that front-month’s lowest settlement since May 9.

The downward momentum continued in early New York trading July 26.

“Market sentiment is gloomy,” Commerzbank analysts said in a note. “Financial investors are continuing to retreat from the oil market and in so doing are generating increased selling pressure.”

Barclays analysts noted that global oil demand for the third quarter is growing at less than a third of the rate it did in the same period a year ago (OGJ Online, July 25, 2016).

Wood Mackenzie Ltd. issued a comment on second-quarter oil and gas company earnings reports, saying its research shows aggregate 5-year compound annual growth rate for production fell to 1.4% in this year’s second quarter from 3.4% in 2014.

“The most affected peer group is the focused US independents where cutbacks have been the most severe,” WoodMac said. “Nearly 30 companies will be producing less in 2020 than in 2015,” WoodMac analysts forecast.

Oil traders await possible economic outlook indicators in coming days from two central banks. The US Federal Reserve Open Market Committee’s 2-day meeting is scheduled to end July 27. The Bank of Japan plans a policy meeting July 28-29.

Energy prices

The NYMEX crude oil contract for September declined $1.06 to settle at $43.13/bbl on July 25. The October contract dropped $1.01 to close at $43.87/bbl.

The natural gas contract for August dipped 3¢ to a rounded $2.75/MMbtu. The benchmark spot-market US gas price went the opposite direction. The Henry Hub gas price rose 3¢ to $2.81/MMbtu on July 25.

Heating oil for August delivery dropped 3¢ to a rounded $1.32/gal. The price for reformulated gasoline stock for oxygenates blending for August was down nearly 3¢ to a rounded $1.33/gal.

The September Brent crude contract on London’s ICE fell 97¢ on July 25 to $44.72/bbl. The contract for October declined 96¢ to $45.13/bbl. The August gas oil contract settled at $388.25/tonne, down $7.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was $41.35/bbl on July 25, down 36¢.

Contact Paula Dittrick at paulad@ogjonline.com.

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