The light, sweet crude oil price fell by more than $2/bbl on the New York market Aug. 7, marking a third consecutive decline after US crude oil inventories showed an inventory build that surprised analysts, prompting some to suggest increasingly dim supply-and-demand outlooks.
The US Energy Information Administration said commercial crude inventories, excluding the Strategic Petroleum Reserve, increased by an estimated 2.39 million bbl to 438.93 million bbl for the week ended Aug. 2.
US crude supplies stand 2% above their 5-year average for this time of year. Analysts surveyed by the Wall Street Journal in advance of EIA’s weekly report inventory report expected inventories would have fallen 2.8 million bbl for the week.
The rise in US oil supplies ended seven consecutive weekly declines.
S&P Global Platts Analytics’ Claudio Galimberti and Shin Kim said Brent crude oil prices “are struggling to hold on to $60[/bbl] level.”
Oil demand growth is at risk from negative consequences of international trade policies. Brent for October delivery fell by more than $2.70/bbl to settle just above $56/bbl on Aug. 7. Closing marked its third consecutive day under $60/bbl.
“Yet, if these trade policies were to be reversed or suspended, as it has occurred often in the past year, we should not be surprised by sudden upward moves in the oil prices,” Galimberti and Kim said. “In fact, barring recessions or significant economic slowdown, which we do not anticipate yet, oil fundamentals remain constructive in the second half of the year.”
They said constructive market fundamentals include July’s drawdown on oil stocks, US monetary easing, and Saudi Arabia’s reductions in crude production.
S&P Global Platts Analytics believes Brent could rise by Dec. 31, “but as of now, everything depends on the direction of the economy, which is highly unstable and unpredictable.”
Energy prices
Light, sweet crude oil on the New York Mercantile Exchange for September delivery fell $2.54 to settle at $51.09/bbl on Aug. 7 while the October contract fell $2.56 to $51.03/bbl.
The NYMEX natural gas price for September decreased nearly 3¢ to $2.08/MMbtu.
Ultralow-sulfur diesel for September fell 7¢ to $1.75/gal. The NYMEX reformulated gasoline blendstock for September dropped nearly 7¢ to a rounded $1.62/gal.
Brent crude for October fell $2.71 to $56.23/bbl. The November contract fell $2.60 to settle at $55.93/bbl.
Gas oil for August declined $25.50 to $533.75/tonne on Aug. 7.
The average for the Organization of Petroleum Exporting Countries’ basket of crudes was $57.82/bbl on Aug. 7, up 11¢.
Contact Paula Dittrick at [email protected].
