The light, sweet crude oil price for September dropped more than $1.50/bbl on the New York market Aug. 1 to settle at $40.06/bbl after having dipped to a trading day low of less than $40/bbl for the first time since April.
The Brent crude oil contract for October also dropped by more than $1 to settle at $42.12/bbl after touching a low for the day of $41.87/bbl.
Barclays analyst Miswin Mahesh of London said the front-month Brent contract has averaged $46.50/bbl so far in the third quarter.
“Given our expectations for margin deterioration, we see further room for downside even from current levels. Margin weakness (along with further supply adjustments) will help unclog oil’s drain,” Mahesh said, citing weak oil demand growth and continued ample world oil supplies.
“The hope for a clear rebalancing may have to wait a couple more months,” he said. “Demand growth remains lacklustre and has not made significant inroads to clear the inventory overhang for oil.”
Other analysts said several factors contributed to the price drop including Libya’s anticipated return to the oil-exporting markets. Three Libyan oil terminals were widely reported to have reopened after being blockaded since December 2014 (OGJ Online, Aug. 1, 2016).
The Ras Lanuf, Es Sidra, and Zuetina terminals opened under a deal between the presidency council brokered by the United Nations and Ibrahim Jidran, branch leader of the Petroleum Facilities Guard.
The NYMEX crude oil contract for September declined $1.54 to settle at $40.06/bbl on Aug. 1. The contract’s low for the day was $39.82/bbl, but it closed higher. The October contract dropped $1.49 to close at $40.84/bbl.
The natural gas contract for September fell 10¢ to a rounded $2.77/MMbtu. On the spot-market, the Henry Hub gas price declined 7¢ to $2.87/MMbtu on Aug. 1.
Heating oil for September fell 5¢ to a rounded $1.26/gal. The price for reformulated gasoline stock for oxygenates blending for September declined 1.6¢ to a rounded $1.30/gal.
The Brent crude contract for October on London’s ICE dropped $1.39 on Aug. 1 to $42.14/bbl. The contract for November was down $1.38 to $42.60/bbl. The August gas oil contract settled at $357.25/tonne, down $14.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was $39.10/bbl, up 13¢.
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