MARKET WATCH: Brent for September holds above $64/bbl

Oil benchmarks gained moderately on markets in New York and London July 9 with Brent for September settling above $64/bbl for a third consecutive day while light, sweet crude for September gained to settle above $57/bbl for a fourth trading session.

Jul 10th, 2019

Crude oil benchmark prices gained moderately on markets in New York and London July 9 with the Brent contract for September settling above $64/bbl for a third consecutive day while light, sweet crude for September gained to settle above $57/bbl for a fourth trading session.

Analysts said oil prices have swayed in recent weeks as oil investors weighed concerns about slowing world economic growth against geopolitical tensions.

“While we see room for crude prices to improve, underpinned by a plethora of geopolitical risk factors, we anticipate that rallies will be capped unless refined product demand improves,” said RBC Capital Markets analyst Michael Tran in a July 8 research note.

“We see Brent and West Texas Intermediate prices averaging $69.50/bbl and $64/bbl, respectively, through the balance of the year,” Tran added of RBC’s price forecast.

Worries over escalating US-Iran tensions have helped support crude oil prices. Media reports indicate Iran recently began enriching uranium above limits set out in the 2015 nuclear accord and warned that it would take additional steps if US economic sanctions persist.

In May 2018, US President Donald Trump announced a US exit from the 2015 nuclear accord and later imposed unilateral oil sanctions against Iran.

Sara Vakhshouri, president of SVB in Washington, DC, said Iranian officials suggest Iran will presell its oil to countries will to buy Iranian crude. She said Iran will be willing to receive its oil payment in advance of delivery in the form of credit, investment, or services.

“This guarantees a physical delivery of oil in near future as countries that invested in Iran or purchase the oil in advance would want their investment return in terms of oil shipment soon,” Vakhshouri said.

“This also helps Iran to regain its market share after the sanctions are relieved or to prevent a significant market share loss if the sanctions remain for long time,” she added.

The American Petroleum Institute on July 9 estimated US crude stockpiles fell by 8.1 million bbl to 461.4 million bbl for the week ended July 5. The US Energy Information Administration was scheduled to release its weekly oil and product inventories on July 10.

As tropical weather system Invest 92L, or what could become Tropical Storm Barry, approached in the Gulf of Mexico, some offshore oil and gas production was temporarily stopped.

BP PLC, Royal Dutch Shell PLC, and Chevron Corp. said the companies were evacuating offshore personnel and shutting production at several sites. ExxonMobil Corp. said it was monitoring the situation to determine if its facilities might be affected. Forecasts varied regarding the storm’s path, which some forecasters expected would primarily affect Louisiana.

Energy prices

Light, sweet crude oil on the New York Mercantile Exchange for August delivery rose 17¢ to $57.66/bbl on July 9 while the September contract increased 18¢ to $57.94/bbl.

NYMEX natural gas for August added 2¢ to a rounded $2.42/MMbtu.

Ultralow-sulfur diesel for August rose 1.5¢ to $1.91/gal. The NYMEX reformulated gasoline blendstock for August increased 2.5¢ to a rounded $1.93/gal.

Brent crude for September rose 5¢ to $64.16/bbl. The October price increased 11¢ to settle at $63.93/bbl.

The gas oil contract for July dropped $3 to $576.25/tonne on July 9. The average for OPEC’s basket of crudes was $64.35/bbl on July 9, down 37¢.

Contact Paula Dittrick at pdittrick@endeavorb2b.com.

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