Oil and gas prices continued falling June 21 with the new front-front August contract for crude down on the New York futures market.
“Another bout of dollar strength took oil prices down another peg,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group. “Banking liquidity concerns in China have kept commodities, including oil, on the back-foot.”
However, he noted front-month Brent crude had climbed back above $100/bbl after a brief dip. “A sustained move below this level, in our view, could prompt a supply response from the Organization of Petroleum Exporting Countries,” Ground said. “The market most likely feels the same, which should provide support on dips below this level. The cartel appears comfortable with the $100-105/bbl range, choosing to maintain its production ceiling at 30 million b/d at its last meeting.”
He said, “Having dipped below its 50-day and 100-day moving averages ($93.99/bbl and $94.09/bbl), West Texas Intermediate appears to be trying to regain these levels after avoiding a move below its 200-day moving average at $92.30/bbl earlier this morning.”
In Houston, analysts with Raymond James & Associates Inc. reported front-month crude fell 4% through last week, “exacerbated by weak oil consumption data from China.” Natural gas prices dropped sharply June 20-21 after gaining earlier in the week on warmer weather forecasts but managed to finish up 1% overall. “Expect volatility to remain high as eight Federal Reserve officials' speeches and numerous economic reports are on deck this week,” Raymond James analysts warned.
Federal officials suggested June 19 their quantitative easing program may began to unwind later this year.
Raymond James reported, “Treasurys sold off rapidly, taking the 10-year yield above 2.5% for the first time since April 2011, while stocks worldwide experienced a similar pullback on fears of the monetary punch bowl being taken away. Overall, the Standard & Poor’s 500 Index fell 2% for the week with energy stocks following suit.” The SIG Oil Exploration & Production Index was down 2% while the Oil Service Index declined 1%. Broader market and crude futures were down in early trading June 24.
The new front-month August contract for benchmark US light, sweet crudes dropped $1.45 to $93.69/bbl June 21 on the New York Mercantile Exchange. The September contract fell $1.52 to $93.63/bbl. On the US spot market, WTI at Cushing, Okla., was down $1.71 to match the August futures closing of $93.69/bbl.
Heating oil for July delivery declined 2.81¢ to $2.84/gal on NYMEX. Reformulated stock for oxygenate blending for the same month for the same month decreased 2.55¢ to $2.76/gal.
The July natural gas contract lost 10.6¢ to $3.77/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., retreated 3.1¢ to $3.87/MMbtu.
In London, the August IPE contract for North Sea Brent was down $1.24 to $100.91/bbl. Gas oil for July tumbled by $17.25 to $858.50/tonne.
The average price for OPEC’s basket of 12 benchmark crudes was down $1.58 to $99.82/bbl. So far this year OPEC’s basket price has averaged $105.31/bbl.
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