MARKET WATCH: Oil futures prices down on more US sanctions against Russia

Sept. 15, 2014
Oil futures prices dropped on the New York and London markets on Sept. 12, ending a volatile week in which traders reacted to reduced oil demand forecasts from three groups and to another round of US sanctions against Russia.

Oil futures prices dropped on the New York and London markets on Sept. 12, ending a volatile week in which traders reacted to reduced oil demand forecasts from three groups and to another round of US sanctions against Russia.

Oil-demand forecasts for 2014-15 were trimmed by the International Energy Agency, the US Energy Information Administration, and the Organization of the Petroleum Exporting Countries.

US Treasury Department officials outlined new restrictions on US companies exporting technology and services that support oil exploration in Russia.

Specifically, US companies are prohibited from helping five major Russian energy companies explore for or produce oil in Russia’s deep water, Arctic, or shale. Those companies are OAO Gazprom, Gazprom Neft, Lukoil, Surgutneftegas, and Rosneft.

The “actions demonstrate our determination to increase the costs on Russia as long as it continues to violate Ukraine’s territorial integrity and sovereignty,” Treasury Under Secretary for Terrorism and Financial Intelligence David Cohen said in a Sept. 12 statement.

Earlier in the week, the European Union implements its own additional sanctions against Russia.

The Brent crude oil price has settled below $100/bbl for days. Yet, spokesmen for the Organization of Petroleum Exporting Countries say they need no need for an emergency meeting.

OPEC plans to meet as regularly scheduled on Nov. 27, OPEC's Secretary-General Abdalla Salem el-Badri told The Wall Street Journal on Sept. 12 at OPEC’s Vienna office. El-Badri said that "the price will come back.”

On Sept. 11, Saudi Arabia Oil Minister Ali Al Naimi and Kuwait Oil Minister Ali Al Omair also said that they see no need for an emergency OPEC meeting. They spoke with reporters on the sidelines of the Gulf Cooperation Council (GCC) meeting in Kuwait.

Prices “always fluctuate and this is normal,” Naimi said. His Kuwaiti counterpart agreed.

“So far, we are confident that prices have not dropped to the extent that makes us call for an emergency meeting,” Omair said.

Energy prices

The New York Mercantile Exchange October crude oil contract fell 56¢ to $92.27/bbl on Sept. 12. The November contract dropped 49¢ to $91.37/bbl.

The natural gas contract for October gained 3.4¢ to a rounded $3.86/MMbtu. On the US cash market, gas at Henry Hub, La., was down 12¢ to $3.81/MMbtu.

Heating oil for October delivery was down a rounded 1.6¢ to $2.74/gal. Reformulated gasoline stock for oxygenate blending for October delivery dropped less than a penny to remain at a rounded $2.52/gal.

The October ICE contract for Brent crude delivery dropped 97¢ to $97.11/bbl. The November Brent contract declined by 90¢ to $97.96/bbl. The ICE gas oil contract for October was down 75¢ to $832.25/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes on Sept. 12 was $95.68/bbl, up 33¢.

Contact Paula Dittrick at [email protected].