The light, sweet crude oil price for July delivery on the New York Mercantile Exchange fell by nearly $1 to settle below $43/bbl on June 21 while Brent crude oil for August delivery fell more than $1 to reach below $45/bbl on the London market.
Oil prices dropped to their lowest levels in 10 months even as a weekly government report showed a drop in US crude oil supplies and as Tropical Storm Cindy approached the Gulf of Mexico coast near the Texas-Louisiana border.
“There is an overwhelmingly bearish sentiment,” said Paul Horsnell, Standard Chartered head of commodity research. “The market is splitting in to those trying to trade on fundamentals and those trying to trade on this bearish trend.”
TS Cindy made landfall in southwestern Louisiana early June 22. Bands of severe weather and rough seas were expected from eastern Texas to northwestern Florida. The US National Hurricane Center said the storm’s maximum sustained winds decreased to about 40 mph with additional weakening expected June 22.
An estimated 17.24% of current oil production in the Gulf of Mexico was shut in along with an estimated 0.32% of natural gas production, the US Bureau of Safety and Environmental Enforcement estimated.
BSEE calculated production percentages using daily reports submitted by offshore operators. The agency said initial reports showed companies evacuated personnel from 40 production platforms or 5.43% of the 737 manned platforms.
Personnel were evacuated from one non-dynamically positioned (DP) rig. No DP rigs were moved off location out of the storm’s path, BSEE said.
US commercial crude oil inventories, excluding the Strategic Petroleum Reserve, decreased 2.5 million bbl to an estimated 509.1 million bbl total for the week ended June 16 compared with the previous week, the Energy Information Administration reported (OGJ Online, June 21, 2017).
Meanwhile, US oil production for the week ended June 16 reached 9.35 million b/d, up 20,000 b/d. Production across the Lower 48 was up 25,000 b/d to 8.865 million b/d while Alaska’s production dropped by 5,000 b/d to 485,000 b/d.
The July light, sweet crude contract on NYMEX fell 99¢ on June 21 to settle at $42.53/bbl. The August contract decreased $1.02 to close at $42.75/bbl.
The NYMEX natural gas price for July dropped 1¢ to a rounded $2.89/MMbtu. The Henry Hub cash gas price was $2.86/MMbtu, up 1¢.
Heating oil futures for July fell 3¢ to a rounded $1.36/gal. Reformulated gasoline stock for oxygenate blending for July dropped by a rounded 1¢ to $1.41/gal.
The Brent crude contract for August on London’s ICE declined by $1.20 to $44.82/bbl while the September contract was down $1.20 to $45.85/bbl. The July gas oil contract gained 50¢ to $413.25/tonne.
The Organization of Petroleum Exporting Countries’ basket of crudes on June 21 was $43.14/bbl, down 76¢.
Contact Paula Dittrick at email@example.com.