Oil prices continued to slump May 24 going into the extended Memorial Day weekend that marked the start of the US summer driving season. The front-month crude contract was down 2.6% for the week in the New York market, and the SIG Oil Exploration & Production Index and the Oil Service Index were down 1.8% and 2.7%, respectively.
“It was a better week for natural gas, though, which was up 3.6%,” said analysts in the Houston office of Raymond James & Associates Inc.
May 27 “was a quiet day across commodities, with the UK and US markets closed for public holidays,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group. “Thin trading and a lack of conviction kept prices in rather tight trading ranges for most of the day.”
However, both West Texas Intermediate and North Sea Brent rallied strongly in early trading May 28—“ostensibly off the back of concerns that the Syrian civil conflict might escalate after it was announced that an European Union embargo on selling arms to Syrian rebels has been lifted,” Ground said. “While this geopolitical risk premium cannot be ignored, unless there is a substantial escalation of Middle East tensions whereby significant oil producers are drawn into a conflict, this premium should fade in due course as the uncertainty subsides.”
The July contract for benchmark US sweet, light crudes slipped 10¢ to $94.15/bbl May 24 on the New York Mercantile Exchange. The August contract dipped 8¢ to $94.34/bbl. On the US spot market, WTI at Cushing, Okla., was down 10¢ to $94.15/bbl.
Heating oil for June delivery declined 0.31¢ but closed essentially unchanged at a rounded $2.86/gal on NYMEX. Reformulated stock for oxygenate blending for the same month increased 1.09¢ to $2.84/gal.
The June natural gas contract lost 2.4¢ to $4.24/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., gained 3¢ to $4.16/MMbtu.
In London, the July IPE contract for Brent rose 20¢ to $102.64/bbl. Gas oil for June regained $4.75 to $854.25/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was up 41¢ to $99.56/bbl May 27. So far this year, OPEC’s basket price has averaged $106.14/bbl.
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