Crude oil prices fell only slightly on the New York market Oct. 20 after the US light, sweet crude benchmark tumbled much of last week and has been down for 3 consecutive weeks while Brent crude oil prices have declined on the London market for 4 consecutive weeks.
Moody’s Investor Services issued a note saying that, despite the recent sharp drop in oil prices, Moody’s analysts believe oil demand “will continue to grow and the recent drop in prices is unlikely to be followed by a precipitous long-term fall.”
Lower oil prices will hurt exploration and production companies’ revenues immediately, with most of the drop falling straight to the bottom line because of high operating leverage, Moody’s said. Drilling and service companies would be pressured if lower prices were to persist to the point that E&P companies reduced spending and their demand for services.
“We are not changing our price assumptions for oil that is used in our ratings analysis and in the near term, lower prices will not impact ratings,” Moody’s said.
Energy prices
The New York Mercantile Exchange November crude oil contract dropped 4¢ on Oct. 20, closing at $82.71/bbl. The December contract price fell 15¢ to $81.91/bbl.
The natural gas contract for November fell nearly a penny to a rounded $3.67/MMbtu. The cash gas price at Henry Hub, La., was down 4¢, closing at $3.68/MMbtu.
Heating oil for November delivery declined 1.2¢ to a rounded $2.49/gal. Reformulated gasoline stock for oxygenate blending for November delivery fell 3.25¢ to a rounded $2.20/gal.
The December ICE contract for Brent crude oil was down 76¢ to close at $85.40/bbl. The January contract was down 77¢ to $85.85/bbl. The ICE gas oil contract for November gave up $3.50, settling at $731.50/tonne.
The average price for OPEC’s basket of 12 benchmark crudes was $82.37/bbl on Oct. 20, down 82¢.
Contact Paula Dittrick at [email protected].
