MARKET WATCH: Oil benchmarks gain while US gas futures drop again

Light, sweet crude oil futures gained with the September contract settling near $56.90/bbl on the New York market and Brent crude for September settling near $63.70/bbl in London while US natural gas futures dropped to a new 3-year low.

Light, sweet crude oil futures gained with the September contract settling near $56.90/bbl on the New York market and Brent crude for September settling near $63.70/bbl in London while US natural gas futures dropped to a new 3-year low.

Some drilling contractors expect a slowdown in rig activity during the second half, citing dropping gas prices and saying that exploration and production companies are reaching the limits of their 2019 budgets.

“We had expected drilling and completion activity to have reached the bottom by now, but that doesn’t appear to be the case,” Mark Siegel, chairman of Patterson-UTI Energy Inc., told investors and analysts July 25 during a conference call on second-quarter results.

Patterson-UTI said an average of 158 of its rigs operated during the second quarter, down from 176 for the same period a year earlier. Executives expect another 10% decline in working rig numbers for this year’s third quarter.

Helmerich & Payne Chief Executive Officer John Lindsay said budget reductions accounted for most of the last 30 drilling rigs released by customers.

“The effects of the industry’s emphasis on disciplined capital spending continues to reverberate throughout the oil field-services sector,” he told investors on a conference call July 25.

Oil investors and analysts also are watching world economies for any sign of slowing oil demand. European Central Bank officials appear to be readying to cut short-term interest rates for the first time since early 2016.

Energy prices

Light, sweet crude oil on the New York Mercantile Exchange for September delivery gained 67¢ to settle at $56.87/bbl on July 29 while the October contract increased 63¢ to $56.96/bbl.

Gas futures for August dropped nearly 3¢ to settle at $2.14/MMbtu—a new 3-year low (OGJ Online July 29, 2019).

Ultralow-sulfur diesel for August edged up less than a penny to $1.91/gal. The NYMEX reformulated gasoline blendstock for August dropped 1¢ to a $1.86/gal.

Brent crude for September rose 25¢ to $63.71/bbl. The October price increased 25¢ to settle at $63.62/bbl.

The gas oil contract for August climbed $2.75 to $586.75/tonne on July 29.

The average for the Organization of Petroleum Exporting Countries’ basket of crudes was $63.79/bbl on July 29, down 23¢.

Contact Paula Dittrick at pdittrick@endeavorb2b.com.

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