By OGJ editors
HOUSTON, July 16 -- Oil futures prices pulled back from a 7-week high as a sell-off in US equity markets spilled over into the New York Mercantile Exchange late Monday, where the plunge in corporate stock prices was viewed as undermining economic recovery and potentially reducing demand for crude.
The New York Stock Exchange fell as much as 439 points Monday in its fifth triple-point loss in six sessions. Although the stock market recovered somewhat, analysts said, the fall sent blue chip stocks toward a low not seen since just after the Sept. 11, 2001, terrorist attacks on the US.
Indications that a pending strike by oil workers in Venezuela might be averted also reduced the previous upward pressure on US oil prices, analysts said. The result was a rollback of much of Friday's gains in energy prices.
The August contract for benchmark US sweet, light crudes lost 41¢ to $27.07/bbl on NYMEX, while the September position was down 39¢ to $27.04/bbl.
Unleaded gasoline for August delivery dropped 1.59¢ to 80.85¢/gal. Heating oil for the same month declined by 0.99¢ to 69.55¢/gal.
The NYMEX August natural gas contract continued its recent downward spiral, slipping 0.3¢ to $2.78/Mcf. "A key support again held at $2.77(/Mcf) as it did on Friday," said analysts at Enerfax Daily on Tuesday. "The market is trying to find out if sell-stops exist below $2.75(/Mcf). With crude prices and the New York Stock Exchange showing continued weakness, the likelihood is that they will drag the natural gas market down right along with them."
In London, lack of fresh supportive news let futures prices for North Sea Brent oil drift lower on the International Petroleum Exchange. However, brokers said the underlying tone of the market was steady, despite concerns that world demand for oil this summer might yet prove disappointing.
If the American Petroleum Institute's weekly report of US inventories of oil and petroleum products again proves bullish, brokers said, IPE oil prices could bounce back above $26.50/bbl. That report was scheduled for release late Tuesday.
The August contract for North Sea Brent lost 26¢ to $26.06/bbl Monday. The August natural gas contract plunged 11.7¢ to the equivalent of $2.13/Mcf on the IPE.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes declined by 9¢ to $25.47/bbl Monday.
