MARKET WATCH: Crude oil prices climb slightly on New York, London markets

Crude oil futures rose slightly on both New York and London markets July 23, and one analyst called Brent oil prices “subdued” while market participants await emerging geopolitical developments in the Russia-Ukraine conflict and also anticipate increasing oil supply from Libya.

The European Union on July 24 was expected to vote on proposed tougher sanctions against Russia, which some have suggested would involve sanctions aimed at Russian banks.

Ole Hansen, head of Saxo Bank commodity strategy, said in a research note that energy markets are closely watching the Russia-Ukraine developments, but he foresees no drastic change in oil prices if the EU imposes more sanctions aimed at Russia (OGJ Online, July 22, 2014).

“There’s ample supply in Europe of gas and oil,” Hansen said. “So, a threat of Russia cutting off supplies wouldn’t have drastic implications in the short term.” He also believes a “cut-off scenario is unlikely,” saying that “there would be no winners in an energy trade war between Russia and Europe.”

Brent demand is “subdued,” having dropped by almost $10/bbl over the last month, Hansen said.

“Increased supplies from Libya and uninterrupted flows from Iraq have combined with weak demand,” he said. “Not least in Europe where refinery margins remain depressed as imports of products from other regions such as US Gulf Coast, Russia, and the Middle East have proven to be more competitive.”

Regarding US natural gas in underground storage in the Lower 48, the Energy Information Administration issued its weekly storage report July 24 estimating a rounded 2.22 tcf as of July 18, which was a net increase of 90 bcf from the previous week.

Gas storage levels were 561 bcf less than last year at this time and 683 bcf below the 5-year average of 2.902 tcf, EIA said.

Energy prices

The New York Mercantile Exchange September crude oil contract gained 73¢ on July 23, closing at $103.12/bbl. The October contract increased 42¢ to $101.42/bbl.

The natural gas contract for August decreased a penny on both the futures and Henry Hub cash markets. The NYMEX gas price settled July 23 at a rounded $3.76/MMbtu, and the Henry Hub, La., price settled at $3.79/MMbtu.

Heating oil for August delivery climbed 2¢ to a rounded $2.88/gal. Reformulated gasoline stock for oxygenate blending for August delivery was down 2¢ to a rounded $2.86/gal.

The September ICE contract for Brent crude delivery gained 70¢ to $108.03/bbl. The October contract also gained 64¢ to $108.26/bbl. The ICE gas oil contract for August gained $4.75 to $887.25/tonne.

The Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes for July 23 was $105.30/bbl, down 44¢.

Contact Paula Dittrick at paulad@ogjonline.com.

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