Light, sweet crude oil contracts dropped more than $1/bbl July 31 on the New York market, giving up the previous day’s gain. The American Petroleum Institute reported US crude oil inventories increased by 5.59 million bbl for the week ended July 27.
Analysts had expected inventories would decrease by 3 million bbl for the week. Following release of the API report, Brent prices on the London market and US crude futures prices declined steeply.
The US Energy Information Administration was scheduled to release its weekly inventory report later Aug. 1. Analysts also watched news reports that US President Donald Trump is considering recommendations from his advisers to impose additional tariffs against China.
The US-China tariff dispute threatens China’s demand for US oil. After Canada, China is the second-largest consumer of US oil exports.
Currently, oil is not on China’s list of 545 US exports designated for retaliatory tariffs. But oil is on China’s additional list of 114 US exports targeted for tariffs if trade tensions escalate.
Suresh Sivanandam, Wood Mackenzie Ltd.’s Asia refining senior manager, said, “There’s more of the US losing out here than China.”
Shale production accounts for much of the US oil exported to China, which jumped after the US government lifted a ban on crude exports in 2015. US oil exports to China continues to grow during this year’s first half.
The Organization of Petroleum Exporting Countries in May announced it plans to increase its production. Non-OPEC Russia also plans to increase its production. Analysts suggest more crude exports from Russia and Saudi Arabia will be headed for China.
Energy prices
The light, sweet crude contract for September delivery on the New York Mercantile Exchange declined $1.37 to close at $68.76/bbl on July 31. The October contract fell $1.32 to settle at $67.63/bbl.
The NYMEX natural gas price for September fell 1.5¢ to a rounded $2.78/MMbtu. The Henry Hub cash gas price rose 6¢ to $2.82/MMbtu.
Ultralow-sulfur diesel for August declined nearly 4¢ to a rounded $2.13/gal. The NYMEX reformulated gasoline blendstock for August dropped more than 3¢ to $2.12/gal.
Brent crude oil for September fell 72¢ to $74.25/bbl on London’s International Commodity Exchange. The October contract declined $1.34 to settle at $74.21/bbl. The gas oil contract for August was $654.25/tonne, down $8.50.
OPEC’s basket of crudes average price for July 31 was $73.62/bbl, up 9¢.
Contact Paula Dittrick at [email protected].
