Light, sweet oil for July delivery dropped to settle below $53/bbl on the New York market June 3 while the Brent contract for July dropped to under $67/bbl in London. Oil prices continued falling in early trading June 4 on concerns about slowing oil demand.
“Slowing economic activity now threatens to derail our base case of robust cyclical [oil] demand growth,” Bank of America Merrill Lynch analysts said in a research note.
South Korea’s economy shrank by 0.4% in the first quarter, indicating more economic slowing in Asia.
“We project Brent and [West Texas Intermediate] to average $70/bbl and $59/bbl, respectively, in 2019, and $65/bbl and $60/bbl in 2020,” Bank of America analysts forecast.
Separately, Saxo Bank analyst Ole Hansen said oil prices are being pressured downward as “the tight supply focus [is] switching to increased risk of lower growth and demand.”
He said escalating tensions in US-China trade relations “has added further downside risks to already slowing economies.”
The Organization of Petroleum Exporting Countries plans to decide in late June or early July whether to continue withholding production along with some non-OPEC countries.
Saudi Arabia officials on June 3 said a consensus was emerging for extending the existing production-cut targets into this year’s second half to ensure market stability.
Energy prices
Crude oil on the New York Mercantile Exchange for July fell 25¢ to settle at $52.85/bbl on June 3 while the August contract dropped 26¢ to settle at $52.99/bbl.
NYMEX natural gas for July fell 5¢ to settle at $2.40/MMbtu.
Ultralow-sulfur diesel for June declined 3¢ to $1.80/gal. The NYMEX reformulated gasoline blendstock for June fell 3¢ to a rounded $1.74/gal.
Brent crude for July held unchanged at $66.87/bbl. The August price decreased 71¢ to settle at $61.28/bbl.
The gas oil contract for June fell $15.75 to $561.75/tonne on June 3.
The average for OPEC’s basket of crudes was not immediately available.
Contact Paula Dittrick at [email protected].
