Senior Staff Writer
HOUSTON, July 19 -- A lower 2005 world oil demand forecast from the Organization of Petroleum Exporting Countries contributed to New York crude oil futures prices closing July 18 at their lowest in more than 2 weeks.
Another contributing factor to oil's downward direction was Hurricane Emily's diminishing threat to US oil and gas production. Emily was downgraded to a Category One hurricane after it crossed Mexico's Yucatan peninsula on July 18.
Although still ranked Category One early July 19, the US National Hurricane Center in Miami expected Hurricane Emily to strengthen slightly while crossing warmer waters in the western Gulf of Mexico. The projected storm track showed Emily making landfall early July 20 on Mexico's northeast coast near the border with south Texas.
Meanwhile, the US Minerals Management Service reported 30 platforms and 12 rigs were evacuated in the US Gulf of Mexico as of mid-afternoon July 18, according to reports from oil companies.
Shut-in oil production 12,851 b/d, or 0.86% of the normal 1.5 million b/d. Shut-in gas production was 58.65 MMcfd, or 0.59% of the region's normal 10 bcfd production, MMS said.
In its Monthly Oil Market Report issued July 18, OPEC lowered its 2005 world oil demand estimate by 150,000 b/d.
OPEC blamed a "slowdown in economic activity in some regions and preliminary demand figures pointing to significantly lower consumption in the first half of the year in some major consuming countries, including China."
The absolute level of demand was reduced for the second, third, and fourth quarters by 300,000 b/d in each quarter, OPEC said.
Global demand growth is now projected to rise an average of 1.62 million b/d this year compared with 2004 levels for a 2005 total of 83.66 million b/d, OPEC said. For 2006, OPEC forecast demand will average 85.2 million b/d.
The August contract for benchmark US light, sweet crudes on the New York Mercantile Exchange dropped 77¢ to $57.32/bbl on July 18, marking its lowest close since June 30.
The September contract declined 71¢ to $58.42/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., shed 77¢ to $57.33/bbl.
Refined products followed the same direction as crude oil prices. Heating oil for August declined by 0.305¢ to $1.6316/gal on NYMEX. Gasoline for August dropped 0.41¢ to $1.6437/gal.
The August natural gas contract slumped by 19.7¢ to $7.652/MMbtu on NYMEX. Enerfax Daily analysts attributed the price drop to lessening concerns about possible storm-related problems for gas rigs and pipelines in the central Gulf of Mexico.
Gas prices dipped in early trading on July 18, hitting the day's low of $7.56 by noon before rebounding slightly in afternoon trading.
In London, the North Sea Brent crude oil contract dropped by 62¢ to $56.99/bbl on the International Petroleum Exchange.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes fell by 6¢ to $52.38/bbl on July 18.
Contact Paula Dittrick at paulad@ogjonline