Light, sweet crude oil prices dropped modestly, settling under $31/bbl on the New York market Feb. 5 to end another volatile week for oil prices. Analysts attributed the volatility to a stronger dollar and world oil oversupply concerns.
Brent crude oil prices settled on the London market at just above $34/bbl Feb. 5. Brent crude oil prices dropped more than 5% for the week ended Feb. 5 while light, sweet crude oil futures prices dropped more than 8%.
The dollar was boosted after US government statistics released Feb. 5 showed the unemployment rate fell to an 8-year low (OGJ Online, Feb. 5, 2016). Oil trades in dollars so a stronger dollar makes oil more expensive for buyers using other currencies.
Separately, the US drilling rig count began February with its largest decline in nearly 11 months, plunging 48 units to 571 during the week ended Feb. 5, said a weekly report from Baker Hughes Inc. (OGJ Online, Feb. 5, 2016).
Now down 885 units year-over-year, the count has fallen to its lowest point since July 9, 1999.
Regarding world oil markets, Barclay’s analyst Miswin Mahesh of London noted a shift in China’s oil consumption pattern for 2015. He said consumption of diesel and fuel oil, predominantly used in the industrial sector, slowed while gasoline demand coming from the consumer sector grew strongly.
“We forecast Chinese oil demand growth to slow in 2016, expanding by just 290,000 b/d (2.6%) year on year,” Mahesh said. ”We expect diesel and fuel oil demand to continue to decline further this year.”
Energy prices
The March crude oil contract on NYMEX dropped 83¢ to settle at $30.89/bbl on Feb. 5. The April contract declined 66¢ to $33.72/bbl.
The NYMEX natural gas contract for March gained 9¢ to a rounded $2.06/MMbtu. The Henry Hub gas price was up 3¢ to $2.08/MMbtu on Feb. 5.
Heating oil for March delivery fell 2¢ to a rounded $1.06/gal. The price for reformulated gasoline stock for oxygenates blending for March was down 3.6¢ to a rounded 99¢/gal on Feb. 5.
The April ICE contract for Brent crude fell 40¢ to $34.06/bbl on Feb. 5, and the May contract dropped 39¢ to settle at $34.76/bbl. The ICE gas oil contract for February was $305.50/tonne, down $6.50.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes for Feb. 5 was $29.30/bbl, down 53¢.
Contact Paula Dittrick at [email protected].
