Light, sweet crude oil prices for July tumbled more than $2 on the New York market June 7 to settle below $46/bbl after a weekly US government report showed crude oil supplies increased by more than 3 million bbl after having fell for 8 consecutive weeks.
The US benchmark was gaining slightly in early June 8 trading. The June 7 settlement was its sharpest drop since early March. Analysts attributed the price plummet to an unexpected build in US crude inventories.
Commercial crude inventories, excluding the Strategic Petroleum Reserve, increased nearly 3.3 million bbl during the week ended June 2 from with the previous week’s total, according to the US Energy Information Administration’s Petroleum Status Report.
EIA estimated the latest US crude inventory total at 513.2 million bbl, which is in the upper half of the average range for this time of year (OGJ Online, June 7, 2017).
US crude oil production fell by 24,000 b/d to 9.318 million b/d for the week ended June 2. Oil production across the Lower 48 fell 20,000 b/d to 8.815 million b/d while Alaska production fell 4,000 b/d to 503,000 b/d, EIA said.
Olivier Jakob at Petromatrix said this time of year typically brings high strong oil demand so a build in US inventories caught analysts and traders by surprise.
“There is some general doubt regarding the success of OPEC,” Jakob said, referring to production-cut targets set by the Organization of Petroleum Exporting Countries and some non-OPEC producers.
The OPEC and non-OPEC alliance in May extended cuts of 1.8 million b/d through the first quarter of 2018 in efforts to lower oil inventories worldwide and to support oil prices. The production-cut targets took effect in January.
The July light, sweet crude contract on the New York Mercantile Exchange dropped $2.47 to $45.72/bbl on June 7. The August contract fell $2.36 to close at $45.98/bbl.
The natural gas price for July declined 2¢ to a rounded $3.02/MMbtu. The Henry Hub cash gas price was $2.99/MMbtu, up 3¢.
Heating oil for July fell 5¢ to a rounded $1.42/gal. Reformulated gasoline stock for oxygenate blending for July dipped 6¢ to $1.49/gal.
The Brent crude contract for August on London’s ICE tumbled by $2.06 to $48.06/bbl on June 7. The September contract decreased $1.99 to $48.43/bbl. The June gas oil contract was $421.50/tonne on June 7, down $6.75.
OPEC’s basket of crudes on June 7 was $46.78/bbl, down 19¢.
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