Crude oil prices fell on the New York and London markets Jan. 20 on concerns about abundant oil supplies given slowing demand and weak world economic growth.
Hans van Cleef of ABN Amro said, “There’s still more supply than demand, and that’s a situation that will not change in just a few weeks.”
The International Monetary Fund downgraded its economic outlook in a January World Economic Outlook (WEO).
“Global growth will receive a boost from lower oil prices, which reflect to an important extent higher supply,” IMF said. “But this boost is projected to be more than offset by negative factors, including investment weakness as adjustment to diminished expectations about medium-term growth continues in many advanced and emerging market economies,” IMF said.
IMF forecast global economic growth at 3.5-3.7% during 2015-16, marking downward revisions of 0.3% relative to the October 2014 WEO.
“The revisions reflect a reassessment of prospects in China, Russia, the euro area, and Japan as well as weaker activity in some major oil exporters because of the sharp drop in oil prices,” IMF said. “The United States is the only major economy for which growth projections have been raised.”
Separately, China faces downward pressure on its economy, China Premier Li Keqiang told state radio Jan. 19, Reuters reported. China was expected this week to report economic growth slowing to the weakest in about 25 years.
Iraq produced 4 million b/d during December, Iraqi Oil Minister Adel Abdel Mehdi said Jan. 18.
Iran’s Oil Minister Bijan Zanganeh said Jan. 19 that consultations with other members of the Organization of Petroleum Exporting Countries about falling oil prices falling had not resulted in any new decisions. Zanganeh said Iran had no plans to call an emergency OPEC meeting.
“Even if the oil price goes down to $25/bbl, the oil industry will not be threatened,” Zanganeh told the Fars News Agency.
Energy prices
The NYMEX February crude oil contract dropped $2.30 on Jan. 20, closing at $46.39/bbl. The March contract dipped $2.66 to $46.47/bbl.
The natural gas contract for February was down a rounded 30¢ to a rounded $2.83/MMbtu. The cash gas price at Henry Hub, La., was $2.92/MMbtu on Jan. 20. There was no price for Jan. 19 because of the Martin Luther King Jr. holiday in the US. The Henry Hub price was $3.09/MMbtu on Jan. 16.
Heating oil for February was down nearly 4¢ to a rounded $1.62/gal. Reformulated gasoline stock for oxygenate blending for February dropped 4.6¢ to a rounded $1.31/gal.
The March ICE contract for Brent crude oil declined 85¢ to settle at $47.99/bbl. The April contract dropped 96¢ to $49.16/bbl. The ICE gas oil contract for February was up $2 to $474.25/tonne.
The average price for OPEC’s basket of 12 benchmark crudes on Jan. 20 was $43.04, down 83¢ from the previous day.
Contact Paula Dittrick at [email protected].
*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.
