The light, sweet oil price for February fell more than $3 in a shortened trading session on the New York market Dec. 24. Crude settled at $42.53/bbl—the front-month’s lowest closing since June 21, 2017.
Analysts blamed the plunge on volatile US stock markets and ample oil production. US crude oil future prices have dropped some 40% since reaching 5-year highs in early October.
Mark Waggoner, president at Excel Futures, told the Wall Street Journal: “Oil was a casualty. Who is going to buy oil on Christmas eve with these shenanigans going on?”
Waggoner was referencing US stock markets, US President Donald Trump publicly criticizing the US Federal Reserve, and US Treasury Sec. Steve Mnuchin talking with senior banking executives.
The Dow Jones Industrial Average plummeted 653 points on Dec. 24 in a session that closed early because of the approaching Christmas holiday. Economists said it was the Dow’s worst week in a decade.
Meanwhile, the US government is in a partial shutdown in a standoff between Trump and Congress about financing for a US-Mexico border wall. The shutdown started Dec. 21 and was expected to last until at least Dec. 27.
On world markets, Brent crude oil for February dropped more than $3 to settle just above $50/bbl.
Trump has said he wants to pull US troops out of Syria, which will influence world oil markets, analyst Olivier Jakob of Petromatrix said in a research report.
“With the US administration in disarray about its Middle East policy, Saudi Arabia has less to fear from the presidential tweets and that could translate into having the kingdom being less shy about stronger cuts to support its budget requirements,” Jakob said.
Energy prices
The February light, sweet crude contract on the New York Mercantile Exchange dropped $3.06 to close at $42.53/bbl.
NYMEX natural gas futures for January dropped about 35¢ to close at a rounded $3.47/MMbtu on Dec. 24. Gas future prices have declined since Dec. 10 when the January contract was a rounded $4.67/MMbtu.
Andrew Hecht, author of the Hecht Commodity Report, said the front-month gas contract had not been above $4/MMbtu since 2014 until November.
“In November, the energy commodity exploded to the upside and reached a high at $4.929 before the latest correction has taken it back south of $4/MMbtu. Natural gas has been correcting from the high since mid-November, but it remained above $4 on the January futures contract until Dec. 10,” Hecht said.
Ultralow-sulfur diesel for January edged down 7¢ to $1.66/gal. The NYMEX reformulated gasoline blendstock for January decreased nearly 7¢ to a rounded $1.25/gal.
Brent crude oil for February dropped $3.35 to $50.47/bbl on London’s International Commodity Exchange. The settlement marked Brent’s front-month contract’s lowest since August 2017.
The gas oil contract for January was $514/tonne on Dec. 25, down from $515.25/tonne on Dec. 21.
The Organization of Petroleum Exporting Countries’ basket of crudes for Dec. 20 averaged $53.92/bbl, down $1.21 from the previous day.
Contact Paula Dittrick at [email protected].
