MARKET WATCH: Oil prices drop pending US inventory report

Crude oil prices dropped to settle just above $49/bbl on the New York market on Aug. 8 while Brent crude oil prices also dropped on the London market but still hovered above $52/bbl pending the scheduled Aug. 9 release of the weekly US oil and product inventory.

Crude oil prices dropped to settle just above $49/bbl on the New York market on Aug. 8 while Brent crude oil prices also dropped on the London market but still hovered above $52/bbl pending the scheduled Aug. 9 release of the weekly US oil and product inventory.

Ole Hansen, head of commodity strategy at Saxo Bank, said oil prices appear to be trapped between rising production and falling inventories.

“Crude oil has settled into a relative tight range after surging in July,” Hansen said. “The rally last month was driven by short-covering as the Saudis cut exports and US inventories decline further. The upside, however, remains capped as rising production in the US and Libya are likely to offset these continued inventory and export declines.”

He noted market participants await release of the Petroleum Status Report on Aug. 9 from the US Energy Information Administration.

S&P Global Platts said its Aug. 7 survey of analysts indicated the US crude inventory was expected to fall 2.5 million bbl for the week ended Aug. 4. US crude inventories have dropped in 7 of the last 8 weeks.

The American Petroleum Institute’s preliminary estimate showed commercial crude supplies fell by 7.8 million bbl last week.

Energy prices

The September light, sweet crude contract on NYMEX fell 22¢ on Aug. 8 to settle at $49.17/bbl. The October contract also fell 22¢ to close at $49.35/bbl.

The NYMEX natural gas price for September gained 2¢ to $2.82/MMbtu. The Henry Hub cash gas price rose 2¢ to $2.77/MMbtu.

Heating oil for September fell 1¢ to a rounded $1.63/gal. Reformulated gasoline stock for oxygenate blending for September declined nearly 1¢ to a rounded $1.62/gal.

The Brent crude contract for October on London’s ICE was down 23¢ to $52.14/bbl. The November contract also was also down 23¢ to $52.19/bbl.

The August gas oil contract rose $5 to $483.50/tonne. The Organization of Petroleum Exporting Countries’ basket of crudes on Aug. 7 was $50.49/bbl, up 45¢. The Aug. 6 basket price was revised to $50.04/bbl. It previously was reported as $50.64/bbl.

Contact Paula Dittrick at paulad@ogjonline.com.

More in General Interest