MARKET WATCH: NYMEX, Brent oil prices take dive on world oil oversupply concerns
US light, sweet crude oil prices plummeted more than $4/bbl on the New York market July 6, marking a 5-month low, while Brent crude oil prices on the London market were down by more than $3/bbl.
Analysts attributed the oil price drops to lingering concerns about crude oversupply and slowing demand coupled with uncertainty about Greece’s economy and Iran’s nuclear talks. Traders and investors reportedly grew increasingly pessimistic upon fears that Greece’s debt could slow European crude oil demand.
The extended deadline for an accord between Iran and Western powers concerning Iran’s nuclear program was July 7, and it generally was anticipated among most political observers that the deadline could be extended again.
If an agreement is reached, lifting of sanctions against Iran would eventually mean the return of Iranian oil to an already oversupplied world oil market, analysts said.
Separately, news reports indicated an oil-sale agreement between Iraq and the Kurdistan Regional Government appeared ready to collapse about 6 months after it was signed.
“The oil deal between Baghdad and KRG has reached a deadlock,” Kawa Mohammed, a Kurdish member of the Iraqi parliament’s Oil and Energy Committee, told the Wall Street Journal. If the deal falls apart, it could hurt Iraq’s efforts to fight the Islamic State.
Energy prices
The August crude oil contract on the New York Mercantile Exchange dropped $4.40 on July 6 to $52.53/bbl. The September contract dropped $4.46 to $52.84/bbl.
The natural gas contract for August was down 6.6¢ to a rounded $2.76/MMbtu, marking its lowest settlement in more than a week. The Henry Hub, La., gas price was $2.74/MMbtu on July 6, down 5¢ from the last available price from July 2. US markets were closed on July 3 in observance of the July 4 holiday.
Heating oil for August dropped 13¢ to a rounded $1.71/gal. The price for reformulated gasoline stock for oxygenates blending for August dropped 11¢ to a rounded $1.92/gal.
The August ICE contract for Brent crude plummeted $3.78 to $56.54/bbl on July 6, while the September contract dropped $3.81 to $57.03/bbl. The ICE gas oil contract for July was down $18.75 to $536.25/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes for July 6 was $55.76/bbl, down $2.58.
Contact Paula Dittrick at [email protected].
*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.
Paula Dittrick | Senior Staff Writer
Paula Dittrick has covered oil and gas from Houston for more than 20 years. Starting in May 2007, she developed a health, safety, and environment beat for Oil & Gas Journal. Dittrick is familiar with the industry’s financial aspects. She also monitors issues associated with carbon sequestration and renewable energy.
Dittrick joined OGJ in February 2001. Previously, she worked for Dow Jones and United Press International. She began writing about oil and gas as UPI’s West Texas bureau chief during the 1980s. She earned a Bachelor’s of Science degree in journalism from the University of Nebraska in 1974.
