Crude oil futures prices on the New York market settled below $91/bbl on Oct. 1 and fell below $90/bbl in early trading on Oct. 2. Meanwhile in London, Brent crude oil prices hovered around $94/bbl.
Analysts said world oil prices are under pressure after Saudi Aramco cut its official selling price for crude oil to international markets, particularly Asia.
It takes time before falling crude oil prices to affect production, Antoine Halff, head of the International Energy Agency’s oil industry and markets division, told reporters on the sidelines of the Asia-Pacific Petroleum Conference in Singapore.
“We might see reductions in production not necessarily just from the Organization of Petroleum Exporting Countries, but also from non-OPEC countries,” if oil prices continue dropping, Halff said.
He suggested some high-cost oil production in Canada could come under pressure if oil prices were to drop to $80/bbl.
Ole Hansen, head of commodity strategy at Saxo Bank, noted light, sweet US benchmark and Brent oil prices are dropping on reports of plentiful oil supplies worldwide along with news that Saudi Arabia has reduced its price to Asian customers for crude oil for November delivery.
The price cut was “more than the market had expected,” Hansen said. “This has been taken as a sign that Saudi Arabia is currently unwilling to hand over market share to Iraq and Iran at a time of slowing demand for the cartel’s crude oil.”
US natural gas futures prices fell on the New York market Oct. 1 while analysts and traders correctly anticipated a gain in weekly gas storage levels.
On Oct. 2, the US Energy Information Administration estimated working gas in underground storage across the Lower 48 states at 3.1 tcf as of Sept. 26, which was a net increase of 112 bcf from the previous week.
Stocks were 373 bcf less than last year for the same period and 399 bcf below the 5-year average of a rounded 3.5 tcf, EIA said in its weekly gas storage report.
Energy prices
The New York Mercantile Exchange November crude oil contract dropped 43¢ on Oct. 1, closing at $90.73/bbl. The December contract dropped 53¢ to $89.74/bbl.
The natural gas contract for November fell nearly 10¢ to a rounded $4.02/MMbtu. Meanwhile, the cash gas price was unchanged at Henry Hub, La., holding steady at $4.14/MMbtu on Oct. 1.
Heating oil for November delivery edged up by less than a penny to a rounded $2.66/gal. Reformulated gasoline stock for oxygenate blending for November climbed 1.24¢ to a rounded $2.45/gal.
The November ICE contract for Brent crude delivery dropped 51¢, closing at $94.16/bbl. The December contract, meanwhile, was down 53¢ to $94.79/bbl. The ICE gas oil contract for October gained $2.75 to settle at $808.25/tonne.
The average price for OPEC’s basket of 12 benchmark crudes on Oct. 1 was $92.31/bbl, down $1.86. The OPEC Secretariat office was scheduled to be closed on Oct. 3.
Contact Paula Dittrick at [email protected].
