MARKET WATCH: WTI ‘more vulnerable’ than Brent to price slide

Brent crude oil will be “well supported on approach of $100/bbl despite yesterday’s global growth forecast downgrade by the [International Monetary Fund],” according to analysts at Standard New York Securities Inc., the Standard Bank Group.

“However, we also believe that demand over the next 12 months could push crude oil sustainably above $110/bbl,” said Walter de Wet. He expects Brent crude to average $107/bbl in the third quarter and $106/bbl in first-quarter 2014. Meanwhile, he expects West Texas Intermediate to average $103/bbl in third quarter and drop to $100/bbl in first-quarter 2014.

“Downside risk lies in the US where the partial shutdown of the Federal government could dent [gross domestic product] growth in [third quarter],” de Wet said, adding, “Therefore, WTI may be more vulnerable than Brent to a slide in prices.”

De Wet said, “The resilience of the US consumer in spite of the country’s various fiscal hurdles bodes well, although we would warn against extrapolating the recent and abrupt pick-up in some economic indicators. Such extrapolation, to our mind, has perhaps already led to undue exuberance in the WTI market.”

Energy prices

The NYMEX November crude contract jumped 46¢ on Oct. 8, settling at $103.49/bbl. The December contract gained 48¢ to $103.31/bbl.

Heating oil for November delivery was up 2.3¢ to a rounded $3.03/gal on NYMEX. Reformulated gasoline stock for oxygenate blending for November remained virtually unchanged at a rounded $2.63/gal.

The November natural gas contract rose 8.7¢ to a rounded $3.72/MMbtu on NYMEX. On the US spot market, the gas price at Henry Hub, La., was a rounded $3.69/MMbtu, an 11¢ gain.

In London, the November IPE contract for North Sea Brent crude added 48¢ to settle at $110.16/bbl. Both the October and November contracts for gas oil increased by $9.25 to $935.50/tonne and $935.25/tonne, respectively.

The Organization of Petroleum Exporting Countries reported its basket of 12 benchmark crudes gained 91¢ on Oct. 8 to $107.36/bbl.

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