MARKET WATCH: NYMEX oil price drops under $32/bbl on oversupply concerns

Light, sweet crude oil prices dropped modestly, settling under $32/bbl on the New York market Feb. 4 in what has been a volatile week for oil prices. Despite some price gains earlier in the week, traders appear primarily focused on world crude oversupply.

Light, sweet crude oil prices dropped modestly, settling under $32/bbl on the New York market Feb. 4 in what has been a volatile week for oil prices. Despite some price gains earlier in the week, traders appear primarily focused on world crude oversupply.

As it did repeatedly during 2015, Saudi Arabia this week reduced prices for its crude oil bound for Europe and Asia. Analysts say the reduced prices will help the kingdom defend its market share of crude exports against rivals, especially Iran, which is ramping up its oil exports with the lifting of nuclear-related Western sanctions. The move also diminished any expectations that Saudi officials would cut production any time soon.

The US Department of Labor on Feb. 5 reported a seasonally adjusted 151,000 jobs were added to payrolls in January, and the unemployment rate fell to 4.9%. The unemployment rate was last below 5% in November 2007, analysts noted. Meanwhile, US oil companies continue to trim budgets.

ConocoPhillips lowered its capital expenditures guidance for 2016 to $6.4 billion from $7.7 billion and operating cost guidance to $7 billion from $7.7 billion (OGJ Online, Feb. 4, 2016).

On Feb. 2, Standard & Poor’s Ratings Services cut its credit ratings for 10 US oil and gas companies, citing volatile crude oil prices. Those companies were Apache Corp., Chevron Corp., Continental Resources Inc., Devon Energy Corp., EOG Resources Inc., Hess Corp., Hunt Oil Co., Marathon Oil Corp., Murphy Oil Corp., and Southwestern Energy Co.

S&P also put ExxonMobil Corp. on watch for a possible credit downgrade of its AAA corporate rating.

Energy prices

The March crude oil contract on the New York Mercantile Exchange dropped 56¢ to settle at $31.72/bbl on Feb. 4. The April contract declined 48¢ to $33.38/bbl.

The NYMEX natural gas contract for March fell 6.6¢ to a rounded $1.97/MMbtu. The Henry Hub gas price was down 1¢ to $2.05/MMbtu on Feb. 4.

Heating oil for March delivery edged up a fraction of a penny to remain at a rounded $1.08/gal. The price for reformulated gasoline stock for oxygenates blending for March was up nearly 1.5¢ to a rounded $1.03/gal on Feb. 3.

The April ICE contract for Brent crude fell 58¢ to $34.46/bbl on Feb. 4, and the May contract dropped 60¢ to settle at $35.15/bbl. The ICE gas oil contract for February was $312/tonne, up $7.75.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes for Feb. 4 was $29.90/bbl, up $1.27.

Contact Paula Dittrick at paulad@ogjonline.com.

More in General Interest