Crude oil prices fell by more than $1/bbl on the New York and London markets Aug. 22, which analysts attributed partially to a Baker Hughes Inc. report that the US rig count jumped by 10 rigs for the week ended Aug. 19 to 491 total working rigs (OGJ Online Aug. 19, 2016).
Prices remain very volatile with occasional price swings up or down of more than $1/bbl. The light, sweet crude oil price for September delivery ended last week at the front-month’s highest level since July 1 at $48.52/bbl. But the contract tumbled in Aug. 22 trading to close at just above $47/bbl.
Meanwhile, traders and analysts say they are becoming doubtful the Organization of Petroleum Exporting Countries and some major non-OPEC producers will reach any agreement on freezing production at current levels.
BNP Paribas has cut its oil price forecasts, saying US light sweet crude oil will average $49/bbl during 2017, down from its previous forecast of an average $50/bbl. The forecast for Brent was cut to an average $50/bbl for 2017, down from $52/bbl.
“Talk of producer cooperation is cheap, and we should not expect much given the dismal track record of such cooperation,” the strategists, led by Harry Tchilinguirian, global head of commodity markets strategy, wrote in a research note.
BNP Paribas expects Iran and Iraq will continue working to expand production capacity, adding that Saudi Arabia’s strategy prioritizes production over oil price.
Separately, investors await news about US interest rates pending a Federal Reserve meeting in Jackson Hole, Wyo., this week. Fed Chair Janet Yellen is scheduled to give a speech Aug. 26. The dollar’s value against a basket of currencies dropped Aug. 23 to its lowest since June, the Wall Street Journal reported.
The NYMEX crude oil contract for September declined $1.47 to close at $47.05/bbl on Aug. 22. The October contract dropped $1.70 to close at $47.41/bbl.
The natural gas contract for September climbed 9.5¢ to a rounded $2.68/MMbtu. On the spot market, the Henry Hub gas price gained 10¢ to $2.74/MMbtu.
Heating oil for September fell 3¢ to a rounded $1.49/gal. The price for reformulated gasoline stock for oxygenates blending for September declined nearly 3¢ to a rounded $1.48/gal.
The Brent crude contract for October on London’s ICE plunged $1.72 to settle at $49.16/bbl. The contract for November was down $1.63 to $49.56/bbl. The September gas oil contract settled at $435.75/tonne on Aug. 22, down $5.75.
The average price for OPEC’s basket of 12 benchmark crudes was $46.04/bbl on Aug. 22, down 78¢.
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