MARKET WATCH: NYMEX oil price falls on strengthening US dollar

Light, sweet crude oil prices declined modestly Feb. 2 on the New York market as the US dollar strengthened. Oil trades are based in US dollars so a stronger dollar makes oil more expensive for buyers using other currencies.

Light, sweet crude oil prices declined modestly Feb. 2 on the New York market as the US dollar strengthened. Oil trades are based in US dollars so a stronger dollar makes oil more expensive for buyers using other currencies.

The Dow Jones Industrial Average fell 4.1% Feb. 2, closing out its biggest 1-week percentage decline since January 2016. The US Department of Labor said the US economy added 200,000 jobs in January, beating expectations.

The Wall Street Journal reported the WSJ Dollar Index, which tracks the dollar against 16 currencies, rose 0.7% to 83.58.

Ed Morse, Citigroup global head of commodities research, said oil investors have ignored the risk of increased US shale production on oil prices.

Morse said, “Two thousand eighteen could turn out to look a lot like 2014—a year that started with very high prices and ended at very low prices.”

Meanwhile, the value of some oil and gas company stock fell despite this year’s rising oil prices. The S&P 500 energy sector fell 4.1% on Feb. 2, nearly double the 2.1% drop in the broader index. ExxonMobil Corp.’s shares declined by about 5%, marking its biggest single-day percentage declines since 2011.

Also on Feb. 2, ExxonMobil reported quarterly net income of $8.4 billion with most of the gains associated with one-time benefits related to US tax changes. Fourth-quarter 2017 earnings were up $9 billion from fourth-quarter 2016. (OGJ Online, Feb. 5, 2018).

ExxonMobil said its production fell by about 130,000 b/d. It also reported a $1.3 billion write-down on its natural gas properties, the second consecutive year ExxonMobil has recognized declining value of certain properties.

Energy prices

The March light, sweet crude contract on the New York Mercantile Exchange fell 35¢ on Feb. 2 to settle at $65.45/bbl. The April contract was down 48¢ to $65.07/bbl.

The NYMEX natural gas price for March settled at a rounded $2.85/MMbtu, down 1¢. The Henry Hub cash gas price fell 16¢ to $2.86/MMbtu.

Ultralow-sulfur diesel for March declined by a rounded 4¢ to a rounded $2.05/gal. The NYMEX reformulated gasoline blendstock for March fell 2¢ to a rounded $1.87/gal.

Brent on London’s ICE for April fell $1.07 to $68.58/bbl. The May contract was down $1.07 to $68.28/bbl. The gas oil contract for February declined $7.50 to $609.25/tonne.

The Organization of Petroleum Exporting Countries’ basket of crudes was $67.05/bbl on Feb. 2, up 22¢.

Contact Paula Dittrick at paulad@ogjonline.com.

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