Oil prices plunged on New York and London markets on Sept. 10 on expectations that US President Barack Obama would try to resolve a conflict with Syria through diplomatic channels, possibly averting a military air strike on that country.
In a televised speech after markets closed Sept. 10, Obama said he asked Congress to postpone a vote on his requested resolution to authorize military force. Oil traders are watching closely, fearing that a military strike could escalate Middle East tensions and possibly disrupt world oil supplies.
The congressional vote delay is intended to give Syria time to turn over its chemical weapons to be destroyed under a pending international agreement. The Russian government is working with Syria to finalize an agreement.
Meanwhile, the US military stands ready to conduct a military strike, if needed, in response to what the US and some others call Syrian President Bashar al-Assad’s alleged use of chemical weapons against citizens of Syria on Aug. 21 as fighting has escalated in a civil war there.
“It's too early to tell whether this offer will succeed, and any agreement must verify that the Assad regime keeps its commitments,” Obama said.
Members of the United Nations Security Council have yet to agree on details of any agreement. France has requested wording that mentions the possibility of military action while Russia objects to that.
Regarding world oil supplies, the US Energy Information Administration said Sept. 10 that unplanned disruptions to world crude oil production averaged 2.7 million b/d in August with Libya accounting for about half of that. Rising production in Iraq, Saudi Arabia, unconventional plays in the US has made up for the disrupted oil supplies from Libya.
On Sept. 11, EIA reported US commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 200,000 bbl from the week ended Sept. 6. At 360 million bbl, crude oil inventories are near the upper limit of the average range for this time of year.
Total gasoline inventories increased by 1.7 million bbl, marking the upper half of the average range, EIA said. Finished gasoline inventories and blending components inventories increased last week. Distillate fuel inventories increased by 2.6 million bbl but remain near the lower limit of the average range for this time of year.
Propane-propylene inventories decreased, remaining in the middle of the average range. Total commercial petroleum inventories increased by 4.1 million bbl last week.
US crude oil refinery inputs averaged about 15.9 million b/d during the week ending Sept. 6, roughly the same as the previous week’s average. Refineries operated at 92.5% capacity last week. Gasoline production was flat, averaging 9.1 million b/d. Distillate fuel production was also unchanged last week, averaging about 5 million b/d.
Crude oil imports averaged 8 million b/d, down by 238,000 b/d from the previous week. Over the last 4 weeks, crude oil imports averaged over 8.1 million b/d. Total gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 401,000 b/d. Distillate fuel imports averaged 99,000 b/d last week.
The October contract for benchmark US light, sweet crudes on the New York Mercantile Exchange dropped $2.13 on Sept. 10, settling at $107.39/bbl. The November crude contract dropped by $1.98 to $106.49/bbl.
Heating oil for October delivery was down 5¢ to settle at a rounded $3.07/gal on NYMEX. Reformulated gasoline stock for oxygenate blending for October declined 6.7¢ to a rounded $2.73/gal.
The October natural gas contract dropped 2.1¢ to close at a rounded $3.58/MMbtu on NYMEX. On the US spot market, the gas price at Henry Hub, La. was a rounded $3.63/MMbtu, marking a 3.1¢ climb from the Sept. 9 closing.
In London, the October IPE contract for North Sea Brent crude dropped $2.47 to $111.25/bbl. The September contract for gas oil settled at $938.75/tonne, down $21.25 from the previous session.
The Organization of Petroleum Exporting Countries reported its basket of 12 benchmark crudes plunged $2.13, closing at $109.26/bbl on Sept. 10.
Contact Paula Dittrick at email@example.com.