MARKET WATCHCrude slips below $69/bbl in New York

June 20, 2006
The front-month crude futures price slipped below $69/bbl June 19 in New York as the Organization of Petroleum Exporting Countries said high crude prices are beginning to reduce demand.

Sam Fletcher
Senior Writer

HOUSTON, June 20 -- The front-month crude futures price slipped below $69/bbl June 19 in New York as the Organization of Petroleum Exporting Countries said high crude prices are beginning to reduce demand, although global demand growth remains steady at 1.4 million b/d.

"Even though the largest share of the increase in world oil demand growth is mainly in the developing countries, signs indicate an easing in oil demand, partly due to the high oil prices," OPEC said in its June Monthly Oil Market Report. "World oil demand in 2006 is forecast to grow 1.4 million b/d or 1.6% to average 84.6 million b/d, broadly unchanged from last month's estimate," it said.

OPEC has reduced its production in recent months, with latest reports indicating production is now below quota levels. "We feel that OPEC's de facto cuts indicate that the producer group will likely defend high-$60/bbl oil prices going forward, a longer-term bullish signal," said analysts in the Houston office of Raymond James & Associates Inc.

Energy prices
The July contract for benchmark US sweet, light crudes dropped 90¢ to $68.98/bbl June 19 on the New York Mercantile Exchange. The August contract fell by 65¢ to $69.55/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down by 90¢ to $68.98/bbl.

Gasoline for July delivery lost 4.68¢ to $1.99/gal June 19 on NYMEX. Heating oil for the same month declined by 3.76¢ to $1.89/gal. The July natural gas contract dropped 29.2¢ to $6.89/MMbtu.

In London, the August IPE contract for North Sea Brent crude fell by 69¢ to $68.11/bbl. Gas oil for July delivery dropped $2 to $607.50/tonne.

The average price for OPEC's basket of 11 benchmark crudes declined by 38¢ to $62.64/bbl on June 19.

Contact Sam Fletcher at [email protected].